Third-Party Data is Overrated

The current trend in automated audience buying is all about putting the power back in the hands of publishers. Behavioral targeting and data brokers have been part of online marketing for years, but what we’re seeing now is that brand marketers are far more interested in using their own data and first-party data generated directly by the publishers. As a result, third-party data is quickly losing its value. Publishers don’t want to pay for it and they don’t want to deal with the mystery surrounding it.
Agency trading desks emerged in the past few years to help advertisers buy inventory based on audience data, but the truth is that agencies and their trading desks are still miles apart from recognizing the strategic value audience buying can deliver in both direct and automated buying environments.
Brands still want to buy guaranteed inventory. That advertising strategy isn’t going anywhere. Look at the TV upfront — years ago, everyone predicted its demise, but that hasn’t happened yet. Savvy marketers would never leave their brand to the spot market. Publishers who leverage audience data in direct and automated environments will have a distinct advantage here as brands start buying audiences in a hybrid of direct and automated.
Brands will see how buying audiences provides a clear picture into which audiences you should promote to a direct buy, and which you should demote to buying on a real-time exchange basis. Hybrid buys can inform CPM negotiations when advertisers want to buy audience segments so valuable they don¹t want them to reach the open market. They can also continue to test secondary and tertiary segments until they achieve a desired ROI. Intelligence gathered from direct and automated buys produces more efficient digital plans.
Publishers that create single point exchanges can leverage both first and third-party data over direct and automated buys. Automated buying in this kind of exchange model is 100 percent transparent, revealing publisher performance in a way DSPs do not always expose to their trading desk. Advertisers who bridge the relationships between their traditional media buyer, trading desk, DSP, and publishers of their choice will reap the most benefit from a unified audience buying strategy.
Cohesive audience buying is the future of digital marketing, but monetizing biddable inventory based on advertiser objectives is not a new strategy; it’s very similar to search marketing. In search, brands have primary keyword buckets associated with their company or product, as well as secondary and even tertiary buckets that get bid consideration. The best keywords command higher prices, but if the secondary keywords drive better results, the brand should consider increasing the bid price and keeping it from other advertisers. Apply this concept to automated audience buying, and you see the appeal in promoting high-performing segments to a direct buy.
With this in mind, there exists the distinct possibility that publishers who adopt audience buying and make more of their inventory available in an exchange-type environment will strengthen their existing relationships with advertisers and open up new ones at the same time.
Moving toward audience buying up and down the media buying value chain will produce immediate value for advertisers. Data-informed advertisers can buy the best performing inventory before it reaches the open market or negotiate a private seat with the publisher, whereby they can manage secondary inventory in an automated environment, buying it after direct buys are done but before it hits the open market. Publishers, in turn, can expect to strengthen their relationships as advertisers use audience data intelligence to inform their direct and automated buying decisions.
The stage has been set and the cast is ready for opening night – how we all engage will determine the success of audience buying across direct and automated environments.

Mario Diez is CEO of QuandrantOne, the joint venture of major newspaper companies that operates a private ad exchange, Q.

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