The Holy Grail of marketing in 2016 is arguably the well-worn “right consumer on the right device at the right moment” — and it’s certainly a valid aim.
But as the scope of data collected about consumers expands, the marketing stakes get higher. In other words, we are barreling toward a future in which right consumer/device/moment will no longer be adequate. Instead, savvy marketers will use consumer data to anticipate needs and give consumers what they want before they know that’s what they want. And that means the bar for consumer expectations will go higher, too.
What’s more, in many cases, marketers will have to supplement their own internal data with data aggregated by third parties in order to gain a more comprehensive view and reach that anticipatory point. And that, in turn, means third parties with data will find themselves in very powerful positions.
Whether they realize it or not, consumers share data with — and are tracked by — familiar names like Facebook, as well as less familiar parties like Acxiom, and this data is used to make predictions about them and to serve ads accordingly, said Aaron Shapiro, CEO of digital agency Huge.
And, in the short term, this has had the theoretical benefit of delivering ads consumers are more likely to find relevant. Right consumer, right?
But here’s the thing — the amount of data collected on consumers is only going to increase and the pace certainly isn't going to slow down in the foreseeable future.
In fact, RP Kumar, executive vice president and director of international research, insights and planning at marketing agency Ketchum, said the amount of data and the pace at which it is collected will accelerate exponentially.
Michael Horn, managing director of data science at Huge, agreed, pointing to applications around image and video recognition, as well as voice interfaces and geospatial data streams that are rich and computationally intensive.
“All of these new AI applications are data-hungry,” Horn added.
And the result is something of a double-edged sword. If brands and marketers are able to zero in on consumers who want to hear from them with offers consumers actually want, advertising may be less likely to elicit groans and eye rolls ever again. Consumers may further benefit from brands that know them and their preferences and can offer products and services at the right moment without consumers having to do anything at all. And this futuristic scenario isn’t much of a leap beyond realizing you’re out of diapers and pressing an Amazon Dash button.
Convenient? Sure. Obtrusive? Maybe.
Kumar pointed to the 2002 Tom Cruise movie Minority Report in which data becomes so ubiquitous, law enforcement can predict who will commit crimes before citizens break the law, posing ethical questions about privacy and boundaries.
“If I’m passing by Starbucks and the proximity of my phone makes a coffee for me, how creepy is that? That someone or some machine is keeping tabs on me,” Kumar said.
But, regardless, it’s coming. Although, to be fair, in the ideal future scenario, coffee will only be made for those nearby consumers who want it.
As it stands, marketers already have access to tons of data from first, second and third parties, said Chris Albert, senior vice president and director of digital/social research and analytics at Ketchum.
Here’s a quick primer on how that breaks down:
First party data
The classic example of first party data is a sales database with consumer names and contact information, Horn said.
“Brands have a near monopoly on that kind of data,” he added.
But it also includes purchases and age and often comes from efforts like loyalty programs and reward systems, added John Stewart, senior vice president of strategy and analysis at marketing and technology agency DigitasLBi.
Per Stewart, first party data is best because a brand owns it and has access to, say, every purchase made at a particular retailer with a given credit card. So Sears, for example, knows if a credit card is being used primarily to buy clothes and accessories or appliances and tools.
But, as noted, first party data isn’t enough for predictive marketing. That’s because it illuminates spending habits, but doesn’t tell a brand what a consumer does in his or her spare time.
And that’s where layering additional data from other sources like geolocation can be helpful in determining whether that Sears shopper who buys tools is more likely to go to Panera Bread or McDonald’s, Stewart said.
“That just gives you a better idea of where you should be [as a marketer],” Stewart said.
Second party data
Second party data, while used infrequently, includes website analytics from parties like Adobe or Google and is data that belongs to a brand but is measured with an outside toolset, Horn said.
Third party data
Third party data includes website behavior and searches and hails from parties willing to sell it, like BlueKai, Lotame and comScore.
In addition, Stewart said TV consumption is becoming available via companies like Rentrak and Samba TV, but it's in the early stages.
But third party data providers also include more familiar names like American Express and MasterCard, which, Horn noted, are more than happy to license their understanding of what consumers buy, as well as companies like credit reporting agency Experian, which aggregates household data for interested parties.
Brands cannot live by first party data alone
Players like American Express, MasterCard and Experian can moonlight as data aggregators precisely because most brands need this third party data to 'keep up with the Joneses.'
“From a technology standpoint, I think most retailers and most brands still don’t have the context to truly be anticipatory,” said David Hewitt, vice president at agency SapientNitro.
And by that Hewitt said he means single-product companies or even CPG leviathans like P&G and Johnson & Johnson have to work harder for a holistic picture of consumers than retailers like Amazon and Target that are able to see trends across SKUs and can make recommendations.
“So I think we’re starting to see a lot of light bulbs go off — ‘Let’s create a standardized profile across many retailers and brands and let’s start to better handshake to better share that data and be smarter about how we market,” Hewitt said. “A lot of consumers are using platforms to log in and are starting to rely on core platforms to make things frictionless.”
Indeed, Horn called Facebook’s launch of its connection API “a really smart thing” as it enables brands to authenticate users, but it also gives Facebook progressively more visibility into consumers’ off-Facebook behavior, including their purchases. And, Horn added, the same goes for Google and PayPal.
“They accumulate a lot of data they can use to optimize internally or that they can package and sell to advertisers and brands more broadly, so a consumer benefits, the brand benefits and it’s a benefit that accrues to the authenticating party,” Horn said.
‘So what’s a little data between friends?’
And with all of this data floating around — some of which consumers may very well want to keep private — it’s easy to see why there’s potential controversy bubbling under the surface when it comes to issues like transparency.
But, Kumar noted, concerns about data tend to vary by age.
“Younger people are not that concerned because they are digital natives and have grown up knowing Google knows a lot about them, so they are not that concerned. That’s why they are so open about posting about so many personal things,” he added.
But Kumar also noted consumers broadly have more or less struck an internal deal with social platforms.
“The key thing we tend to forget is that Facebook, Twitter and Instagram are free. We don’t pay for these services directly, but we enjoy them in exchange for some data about ourselves. So what’s a little data between friends?” Kumar said. “People, particularly younger folks, are kind of okay with that. It’s an uncomfortable, uneasy truce…but the conversation about these platforms selling our data to others is where issues start arising.”
‘Data is the new oil’
Facebook is indeed selling consumer data. And it is incredibly valuable.
“Data is the new oil. Or data is the new gold. Whatever is increasing in value,” said Jon Suarez-Davis, CMO and CSO of data management platform Krux.
Cue Mark Zuckerberg’s laughter.
But Facebook isn’t alone. Look no further than Google, which also has a direct relationship with consumers.
“They are not relying on third party household aggregated data that might be old,” Horn said. “They have direct observations of what consumers are looking for today and what they are shopping for. And they know that for you as a logged-in individual.”
Facebook frequently partners with brands, and, Stewart noted, offers good targeting data, but, he added, “I don't think they are selling their data [or] allowing brands to access it for purposes beyond advertising on Facebook.”
Indeed, Stewart said some of Facebook’s data is extremely valuable, so it may not actually sell it at all, but rather keep the data for its own competitive advantage, which Google and Amazon may ultimately decide to do, too.
“It's a race to quality data — there's so much data out there that it's actually becoming cheaper to get it [with] lots of providers wanting to sell it to you, but high quality data will be the next move,” Stewart said. “And what is quality to some brands may not be quality to others. That's why using your own first party data and augmenting it…with third party data is so valuable.”