US firms to spend $19bn in 2018 on third-party data despite industry's privacy concerns
American companies are increasing their spend on third-party data despite industry-wide concerns over consumer privacy.
US firms spend big on third-party data despite privacy concerns
According to a study from IAB Data Center of Excellence and Winterberry Group, US firms are projected to spend $19.2bn on third-party audience data, up 17.5% from last year.
Jonathan Margulies, managing director at Winterberry Group, told The Drum that the third-party data market is largely being driven by two factors: the continued growth of data-enriched digital media and burgeoning marketer interest in identity-oriented data.
"As advertisers continue to grow their budgets on display, search, and complementary formats, they’re simultaneously looking at data as the effective fuel to power programmatic buying, targeting, and dynamic content optimization—allowing for impressions that are, ultimately, more relevant and impactful," Margulies said.
This year will mark the first time marketers will spend more on digital assets than on traditional, terrestrial data. Digital spend increased by 36.9% to $3.67bn. Terrestrial spend increased slightly to $3.62bn.
Investment in identity-oriented data increased by 50% to $850m.
"Many brands struggle with the sheer quantity and variety of data types that their marketing and customer service efforts are generating today. Identity-oriented data and solutions provide a means of helping organize this information so that brands can maintain a persistent understanding of who is in their addressable audience.
"That ultimately helps to drive better advertising experiences, [and it] provides a means for improving customer service and allowing for better, more responsible management of the underlying data so as to conform to changing regulatory needs and consumer expectations," said Margulies.
US companies spent $2.8bn on transactional data and $1.02bn on specialty or engagement data.
The uptick in spend can also be attributed to the rise in programmatic advertising.
“Programmatic advertising has taken a central role in the marketing landscape and this study shows how increasingly vital third-party data has become as a result,” said Orchid Richardson, vice president and managing director, IAB Data Center of Excellence. “Third-party data provides insights — from geolocation to interests and more — that can help brands deliver highly personalized messages to consumers and expand audience.”
The implementation of GDPR and the coming California Consumer Privacy Act means advertisers are investing in data activation solutions that aim to boost transparency and accountability while delivering on brand safety.
The report divided spend on data activation in two categories: data and analytics.
Firms spent $4.97bn on data management, processing, and integration, a 25% increase year-over-year.
Firms spent $2.26bn on analytics, modeling, and segmentation, a 2.9% increase since last year.