To Thrive, Brands Must Share Marketing Data
By Kiki Burton
Faulty data can doom even the smartest advertising campaign.
It creates scenarios where a company trying to promote men's razors for example, accidentally targets middle-aged women; or an attractive home loan offering is offered to college-aged students, a group that is nowhere near ready to buy a house. These attempts to build brand loyalty with more personalized offers are well-intentioned, but completely thwarted.
Across industries, this is a big problem for brands. By failing to verify the quality of their data vendors, marketing departments end up with unreliable data. And many vendors keep their methodologies a secret, making it difficult for marketers to know exactly what they're getting.
However, some marketers have found a solution. Instead of relying on solely on third-party vendors, companies increasingly partner with other brands to access each other's proprietary data. This "second-party" data is far easier to verify. These data-sharing partnerships give marketers a significant leg up on their competitors; more on this in a bit.
This is not to say third-party data is not a useful tool, but it can miss the mark. When asked to determine consumers' ages and gender, for instance, some vendors barely outperform people guessing at random, according to research by ad agency Mediasmith. In an ideal world, marketers could rely more on first-party data collected directly from customers (generally more recent and accurate), but first-party data only helps marketers engage repeat customers — not find new ones.
There are numerous companies out there with more detailed consumer information, from social media networks to media sites. Although this data is valuable for targeting new customers, it is only accessible to marketers to a certain extent.
In this environment, any company that can expand its datasets without sacrificing quality would surpass its competitors. That is precisely the promise of data-sharing partnerships.
Take Tourism Australia's $50 million, five-year data-sharing partnership with Virgin Australia Airlines.
When a consumer looks up the Sydney Opera House on Tourism Australia's site, the tourism agency can share that information with Virgin Australia. The airline can then target that consumer with flight deals to Sydney.
Once a traveler books, Virgin can return the favor by giving Tourism Australia details on where that customer is headed and when. That enables the agency to target consumers with deals and promotions about festivals and events relevant to their specific itineraries.
Thanks to the partnership, both organizations can advertise smarter and minimize wasteful spending. And consumers benefit too, since they receive more relevant information and less spam.
Brand matchmaking works in many different sectors: Imagine how a credit-card company that offers travel rewards would benefit from accessing an airline's frequent flyer data, or joint prospects between a high-end hotel and luxury car brand.
Many of these relationships have already borne fruit. Ninety-six percent of marketers employing second-party data considered it valuable or very valuable to their marketing efforts.
Finding a suitable data partner, however, isn't easy. Firms must be sure that their partners keep data secure and use it responsibly. And marketers often need to forge multiple, complicated partnerships to achieve sufficient scale.
The good thing is that many services are available today, which have made second-party data far more accessible to companies large and small. Within a year, an estimated 85 percent of brands will incorporate second-party data into their marketing strategies.
In the coming years, brands relying on the old combination of first-party and third-party data will be left in the dust by competitors who have mastered the art of sharing.
Source
"To Thrive, Brands Must Share Marketing Data." MediaPost, 2/6/18.