Commentary

Is Third-Party Data Dead?

by Cory Treffiletti , Featured Contributor, November 14, 2018

I am a marketer, and I use data. Our team uses our first-party data as seed data for ad targeting and building new audiences. We also use a lot of the data available in Google and Facebook for targeting.

I’ve spoken with a number of marketers using Amazon data for targeting on Amazon.

Of those three platforms, only one of them truly allows third-party data to be made publicly available to the end user, and could certainly shut that down at any time. This creates an existential crisis for the folks that aggregate and sell third-party data, so I ask the question again: Is third-party data dead?

The first- and second-party data marketers have access to is valuable and it works. It creates massive efficiency in campaigns and drives higher conversion.

Our efforts continue to improve the more we layer in the right data, but very little (if any) of that data is third-party-based. When we do end up testing or utilizing third-party data for ad campaigns or lead-gen efforts, it is rife with inaccuracies and that shows up in the efficiency metrics.

Given that I’m judging this off a sample size of one (me), I’m curious whether other advertisers have witnessed this trend and whether they even notice the absence of third-party data in platforms like Facebook. Does this absence hinder your efforts?

Third-party data is obviously valuable for open web ad campaigns, but that represents a smaller portion of the total ad spend. As Amazon continues to scale and take more of those dollars, what happens to the open web? How does this shrinking addressable market opportunity affect the world of third-party data?

The consolidation in data companies appears to have taken hold. There are a few leaders remaining, but it seems growth has slowed. What I read about data that’s interesting pertains to data governance and data management directed into CRM use cases. Still, there’s not as much conversation about new ways to target or retarget audiences. Two years ago, everyone was chattering about lookalikes, and these days that’s a common practice.

It doesn’t sound like there’s a ton of innovative ideas being offered up for new ways to use this data. Marketers may have maxed out how they leverage these tools, which begs the question again: Is third party dead, or has it simply reached a maturation stage and leveled out?

The evolution of the data management platform toward the consumer data platform demonstrates the marketing pendulum has shifted from data to creative once again. This swing happens about every six to eight years. Marketers are focusing again on the actual message itself and not just the persona of the person receiving the message or how they were identified / targeted.

As more marketers are diverting their attention towards creative, does that imply they’ve learned all they need to know from third-party data?

I asked this question a few times, so I think it’s only fair if I offer up an answer. In my humble opinion, the answer is “maybe.” I think third-party data value has reached its high point and will either plateau or start to become less necessary.

The leading ad platforms have the majority of the dollars, and they also have the data. With Verizon and AT&T coming up as well, where you spend your money is also the first-party owners of the data, too. That ship has sailed.

Where I think the “maybe” comes into play is, it’s possible that third-party data could still feed into AI systems to verify the value of the first-party data or augment its usefulness. This is not an advertiser-facing solution, but rather an infrastructure play.

If these leading ad platforms can use the third-party data to enhance the value and accuracy of what they sell to advertisers, then there could still be value there to work with. The development of AI is dependent on a high volume of data, which seems to be the stage where we are.

All that being said, as a marketer, my focus is now on first- and second-party data from the primary platforms where I spend my budget. This seems to be the state of the ad world as we know it, and many other marketers seem to be in agreement with that point of view. Are you?

data, data management

2 comments about "Is Third-Party Data Dead?".

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Ed Papazian from Media Dynamics Inc, November 14, 2018 at 3:12 p.m.
Very interesting piece, Cory. I think that you may have answered your own question when you said that perhaps marketers have learned----or are learning---- all that they need to know from third party data and now they are focused on generating better creative. If that's what's happening, it follows a logical progression, namely that once you figure out who you need to target---as a group---or a collection of groupings--- and this includes mindsets not just purchase info--- you target them, collectively. So, naturally, you opt for a unified creative approach that works, generally, for each target group, but not on a granular basis. Digging ever deeper on the "data" front may be seen as overkill.
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Dan Kidd from Datawallet, November 15, 2018 at 11:29 a.m.

Good observations Corey. We agreee that data from third parties is on the decline and will likely be a much smaller part of the equation in the near term. But the value of the data that is generated across consumer platforms, Facebook, Amazon, Google etc. is very valuable. There is a revoulution that has started in the consumer data market where the ownership and control of the data is shifting from the walled gardens and data aggregators to the individual consumer. This empowerment of the consumer to posses, control and permission their data directly to brand marketers will change the dynamic for the positive. Datawallet is leading this revoution and is providing the opporunty for consumers and brands to build a deeper relationship. Consumers will provide clear permission to access the data they create and own from Facebook, Amazon, Search, Browser history etc. in exchange for rewards.

This change to Consumer controlled data will reverse the trend you observed and will provide incredible depth of data directly from consumers to the brands they love. The next several years will see an increased use of consumer supplied, high quality second party data to drive deeper consumer/brand trusted relationships. We welcome this change.