• by Ray Schultz , Columnist, February 21, 2024

Brands are pouring money into data, and getting increasingly astute about how to use it, judging by Demystifying the Data Layer: Transformation of Marketing Data Infrastructure," a white paper released Wednesday by Winterberry Group.  

This year alone, $27 billion will be spent on data in the U.S., data services and infrastructure -- and that total is expected to rise by 8% to $33 billion by 2027, according to the report.  

In 2024, that investment will support $270 billion in U.S. media buying across data-driven channels, up from $85.7 million in 2004 and $174.4 million in 2018. 

However, it could be that spending on data infrastructure has slowed down in the U.S. because firms have already made these investments. While 74% are increasing their spend on data infrastructure, only 19% are significantly increasing it.

In contrast, 60% foresee major increases in the U.K. and 35% in the EU.

Similarly, only 27% are greatly increasing their spending on data services, while 67% are hiking it to some degree. In the U.K., 56% are significantly boosting their spend and 39% in the EU. 

Whatever the spend, marketers admit they face several challenges when deploying data, including:  

• Data Accuracy and Quality — 50% 
• Security — 41%
• Cost/Pricing—41%
• Privacy Regulation — 37% 
• Compliance — 28% 
• Data Solution Architecture Design — 27%
• Integration Complexity — 27% 
• Scale/Volume of Data — 19%
• Limited Talent/In-House Expertise — 17% 
• Vendor Selection and Management — 14% 

Privacy compliant first-party data now dominates, judging by usage:

• First-Party data — 87% 
• Second-Party — 41%
• Third-Party — 45% 

And email reigns supreme. Data has been leveraged to support these channels over the past 1-3 years:

• Email — 63% 
• Paid Social — 59% 
• Direct Mail — 54% 
• Display and Video — 44%
• Connected TV (CTV. OTT, Addressable) — 42% 
• SMS/Mobile Push — 38% 

Here are the solutions being used to store, manage and analyze data: 

• Engagement Marketing Platform (CRM) — 83% 
• Customer Data Platform — 59%
• Data Warehouse/Data Lake — 57% 
• Collaborative Data Environment/Clean Room — 47% 
• Analytic Data Environment — 39% 
• Identity Graph — 35% 

Where do they store their data warehouses or data lakes? They utilize:

• Hybrid (on-premise and on-cloud) — 56% 
• On-premise — 32% 
• On-cloud — 12% 

To hear Winterberry tell it, there are three data levels in the marketing/advertising ecosystem:  

1. Data Layer — Data is ingested, consolidated and standardized for analysis and activation 
2. Intelligence Layer — Data is leveraged to derive insights and inform decisioning related use cases
3. Activation Layer — Applications and platforms are used to communicate across outbound and inbound channels.  

“Several market forces are transforming how enterprises responsibly collect and use data for marketing activation,” concludes Michael Harrison, managing partner, Winterberry Group, and a co-author of the research.  

Harrison continues, “Increased privacy regulation, a rapid shift toward digital-centric performance media, and the evolution of tech driven by machine and learning and generative AI [artificial intelligence] are helping to build a centralized data infrastructure that can support many business use cases – involving insights, activation, optimization and measurement. We’re seeing brands and companies embracing this layer as foundational.” 

Winterberry Group surveyed 200 respondents in the United States, United Kingdom, France and Germany and interviewed more than 60 marketers from October 2023 to February 2024.