Data is not the new oil. I know you hear that phrase about data being “the new oil” all the time at cocktail parties and conference keynotes. You see it on cool-looking slide presentations in conference rooms. You read it in business publications. You even see it on magazine covers. But that doesn’t make it true.
Oil is valuable not just because it can be directly converted into harnessable energy, but because it is finite and scarce, expensive to extract, refine and transport.
Data has none of those qualities. It is not scarce, but the opposite: plentiful, and becoming more plentiful every day, growing exponentially as more digital systems interact with more people and more systems, creating more “data exhaust.”
Further, data does not produce value independently. You can’t just refine data and burn it as you can oil. Not only does most data need to be refined and cleaned, it also needs to be combined with other data, normalized, analyzed -- and most importantly, inserted into an algorithm and applied to some other process before its value can be fully realized.
Algorithms and processes matter more than data. Don't get me wrong. Data can create value, but its relative contribution to most situations, particularly in the world of advertising, is much less valuable than the algorithms or processes with which it interacts.
People were searching for things on the web for years in the mid- and late 1990s, but until Larry Page and Sergey Brin created the page rank algorithm and launched Google, users’ searches were not particularly fulfilling, despite the fact that what they were looking for -- as well as the data of the web -- was all in existence and quite accessible.
Likewise, until Bill Gross and his team created the bid-based cost-per-click monetization model at GoTo.com (Overture), search was not a very valuable or salable advertising platform. Today, thanks to those algorithms and processes, search advertising is expected to reach $95 billion globally this year, according to Zenith.
We’re pretty mediocre at leveraging data in digital display. How will we do with TV? Data is not the future of TV advertising. However, what we do with data will be TV advertising’s future.
There’s no question that the TV advertising experience today leaves much to be desired. Viewers get too many redundant and irrelevant ads. Advertisers have campaigns that reach way too many of the wrong people and contain incredible amounts of wasted frequency. As Erwin Ephron famously told us years ago, “Frequency is crabgrass.”
So, if we want to know how data is likely to be used in TV advertising, looking at how folks have used it in digital display is probably a good place to start. My assessment: Data-driven improvement in the digital display ad world today is mediocre at best. Fundamentally, from a user perspective, we’re not much more evolved than highly scaled e-commerce retargeting: the famous pair of shoes that follow you around.
Incredibly, our industry started doing that kind of retargeting 20 years ago, and built industrialized systems to do it in the mid-‘00s. We haven’t yet seen holistic solutions that collectively consider the user, the advertiser and the publisher, leveraging available data and truly delivering fewer, more relevant ads that not only yield better for advertisers and publishers, but truly delight users by providing offers, information or entertainment.
All this will happen someday, but that lag is not caused by lack of data.
Today, lots of folks are talking about building and deploying industrial systems to leverage “massive pools of data” to make TV advertising work like digital. I am hopeful, but I also hope we don’t think it’s really just about the data. It will be about what we do with the data.
For sure, we need to do much better than we’ve done with digital display. Television and its massive loyal audiences and advertisers are too precious to squander. Let’s make sure to get the algorithms and processes right.
What do you think?