As cookies retreat into ad-tech history, publishers are hard at work to extract all the value they can from their first-party data. There is a sense that, amongst those that have amassed mountains of subscriber data, publishers particularly have struck gold, and that advertisers and marketers will line up for a piece of it.
Yet the same voices that are telling publishers to guard their first-party data to increase its value are also telling them to organize it into a common taxonomy. In this way, it can be stacked with data from other publishers, overcoming first-party data’s inherent scale limitations.
If I was a publisher, I’d ask how my first-party data retains its unique value when clumped together with other publishers. But this opens up a larger question about defining the value of first-party data and what publishers should be doing now to unlock the full potential of their audiences.
Under or over-valuation of first-party data is everyone’s problem
There has been a misunderstanding of marketer behavior that has led some publishers — particularly independents — to overvalue their first-party data. The truth is that marketers don’t pay more for data when it’s scarce, as publishers hope, but pay based on the customer acquisition costs connected to targeting any particular set of such data.
To give an example, imagine a publisher of a website for cat lovers. Cat food and kitty litter have low CPMs, so the publisher looks for ways to increase the value of their user profiles. If they discover that their audience of cat fans also have high purchasing intent for cars, which have high CPMs, they can sell such opportunities for a higher rate.
However, such insights cannot be unlocked with first-party data alone, leaving publishers who fail to activate on the complete persona stuck with selling ads for catnip when they could be selling ads for Coupes.
Publishers who overestimate what can be achieved without data expansion or enrichment and ID solutions may be leaving a great deal of yield on the table.Mike Woosley, Chief Operating Officer, Lotame
A common taxonomy could solve scale, but how basic is too basic?
One of the solutions being pursued to maximize the value of first-party data is to organize them into a common taxonomy. This will allow aggregation with other publishers to achieve the scale that first-party data lacks.
However, scale alone does little for marketers if large volume audiences lack sufficient richness to triangulate likely prospects. A common taxonomy also does nothing to enable people-based requirements like frequency capping or, more importantly, the delivery of a detailed view of the consumer.
About a decade ago, programmatic went from zero to around 80% of all display advertising because it enabled bidding and increased publisher yield. Despite cries of “leakage” and unequal information, the programmatic system works well for publishers and advertisers.
To go back to the example of the website for cat lovers, if a bidder knows that its traffic has high auto-purchase intent, the buyer can bid $10 towards targeting that traffic. The publisher benefits by selling $10 CPM automobile ads rather than $0.10 CPM ads for cat products.
Publishers should seek the highest value for their traffic based not only on what they know, but what the market knows.Mike Woosley, Chief Operating Officer, Lotame
When publishers delay, the walled gardens grow stronger
While publishers shop around for solutions to enriching and monetizing their first-party data, Google, Facebook, and Apple are executing in their walled gardens on solutions that give advertisers what they actually want.
Each is finding their own means to sell complete pictures of consumers to advertisers with an incomparable level of detail due to the inherent breadth and depth of their platforms. Ironically Google has offered a watered-down version of its tools for publishers: its Topics proposal works cross-domain and somehow does openly what the programmatic space has been accused of doing in the dark for years: “leaking” cross-domain data and surfacing it in a biddable environment.
Publishers hoping that marketers will rush to them for their first-party data may instead watch them queue for the privilege of accessing the richness of personas in the Big Three’s walled gardens.
Publishers are sitting on gold of a different sort
There is gold in publishing, but it can’t be found in first-party data alone. Another key asset publishers hold is their traffic, which possesses inherent value even when known scope is lacking. Publishers who make the most of digital media tools to synthesize and monetize both first-party data and traffic will discover a new approach to identity that is more secure, private, efficient, cost-effective, and reliable than the old system.
If publishers are not careful, their first-party data won’t turn to gold, it will turn into oil: a commodity traded at its lowest value, with no regard for its source, its quality, or its volume. Whether or not they strike gold will depend on how they activate and integrate their first-party data with a wider set of tools to maximize the value of their asset.
Publishers should also be working with marketers to facilitate the activation of audience profiles and allow them to bring in data of their own. Meanwhile, they can do what they do best: support tools that deliver traffic with identity and, as a result, monetize that traffic at its true market price. That is when publishers and marketers alike will strike true gold.
Chief Operating Officer, Lotame
Lotame delivers flexible data solutions to future-proof connectivity and drive performance across all screens. Marketers, publishers, and platforms rely on our innovative and interoperable solutions, powered by our identity platform, to onboard, enrich, and address audiences. Lotame is headquartered in the United States and serves global clients in North America, Latin America, Europe, Middle East, Africa, and Asia Pacific.