Digital efforts continue to revolutionize the advertising industry. But with every innovation seems to come a challenge brands and their agencies must resolve.
Thanks to the latest innovations, online marketers now make advertising decisions at lightning speed and target people in a wide variety of ways. However, they noticeably struggle when trying to explain exactly who is being targeted.
Audience transparency is a critical issue in digital marketing. In a 2013 poll of online advertising leaders, 17 percent said that the single most effective way to manage digital media waste was to “use a tool that offers control over audience data.” Because online advertising is becoming a larger part of media budgets, Michael Greene of AudienceScience says, “… gaining greater transparency has taken on a higher degree of urgency …”
Third Party Data at Heart of Issue
What is the root cause of this issue? For one, advertisers increasingly rely on third-party data providers, such as BlueKai and eXelate, to provide them with targeting lists for their campaigns. For example, these segmented lists might include people who are likely to apply for a mortgage, people who use a certain type of toothpaste or people who are from a particular economic group.
However, marketers repeatedly call the reliability of this data into question. After Colette Dill-Lerner, vice president of Internet marketing at Guthy-Renker, reviewed some of her company’s third-party data, she found that nearly 50 percent of the genders reported were wrong. Before using the data, it’s important for brands and their agencies to evaluate how it will be used. Additionally, if there is any first-party data available, it is typically more reliable and accurate than third-party data.
Despite this high error rate, there is little incentive for third-party data providers to release their exact methods of data collection, as those methods are proprietary. Additionally, as demand increases for third-party data, the providers become more competitive and protective of their collection methods.
A Two-Part Solution
What should agencies do, aside from collecting first-party data, to help ensure accurate audience targeting?
Agencies and trading desks can push for further transparency from third-party data providers.
Media planners and advertising agencies control a large portion of the revenue for third-party data collectors, thus holding a significant amount of leverage in the relationship. If a big enough group of agencies start asking third-party data sources for their exact methodologies, it could go a long way toward clarifying this murky data source.
Agencies should be clear about exactly how much clients are paying for third-party data.
Considering the relative unreliability of third-party data, agencies need to be transparent regarding how much money is being spent on this data and exactly who is receiving it.
This will continue to be a difficult issue for online marketers to solve. Data aggregation is an inherently messy process. Getting third-party data providers to be fully transparent, and to explain that transparency in a client-friendly way, will be an arduous process.