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2nd Party Data – The Most Exclusive Party Yet!

October 22, 2017

It’s fair to say audience targeting and the demand for audience data is here to stay, and as an industry we have become very familiar activating 1st and 3rd party data sources. In fact, we are now in an era where audience quality is more important than ever. As we move into a more sophisticated, data-centric ecosystem, validation of audiences and quality data is an industry hot topic. For instance, all marketers and agencies want access to data and typically the key question for most data buyers is, “What exclusive data sources do you have access to?”

As our appetite for exclusive data sets increase, so has the rise of 2nd party data. To put it simply, 2nd party data is data bought directly from the original source, in other words buying someone else’s first party data.  

The buying and selling of 2nd party data has mutual benefits for both parties and it’s for this reason the popularity of this data will continue to increase. The data buyer now has the ability to work with the seller to build exclusive data sets and to negotiate pricing directly with the seller. When concern over data quality is rife, this is a great way for the buyer to control key metrics which typically affect data quality such as frequency and recency of the audience they are buying. This transparent buying of audience data means advertisers can now limit the crossover of buying the same or similar data sets to its competitors,

and instead focus on purchasing unique data sets to increase reach and scale of media campaigns. Understanding the quality of audience data purchased will also help advertisers better measure performance of the campaigns. Now advertisers can understand the value of data sourced vs technology used as the key catalyst when driving performance.

For the data seller, the benefit of selling data to the 2nd party marketplace is revenue. For example, when selling 2nd party data, the data seller can typically expect to charge higher CPMs for custom built audiences, as data is sold in a transparent, controlled environment. In addition, as audiences are sent directly into the advertiser’s DSP seat, this reduces the risk of diminishing CPMs and ensures data remains exclusive. However, the real advantage of 2nd party data is that, unlike 1st party data, it is considered a scaleable data source and with this is set to generate large revenue volumes. For publishers this will help to create an alternate revenue stream beyond selling of inventory.

Of course, there is one glaring reason that this exclusive data relationship will build traction of the 2nd party marketplace, and this is GDPR, the EU privacy laws commencing May 2018. The new regulations make it increasingly difficult to sell aggregated data, as that data is often is collected from a variety of different sources which under the new guidelines will make a user opt-in very difficult, depending on where this data is being captured. As 2nd party data is non-aggregated and from a known source, this will ensure users can explicitly opt-in to targeting.

It’s clear that over the next 6 months, those looking to limit cookie loss which will inevitably occur, (although the extent to which this will happen is relatively unknown) should begin fostering these relationships with 2nd party data sellers. For publishers, this is a great way in to capitalise on increased demand for data within the ecosystem. Therefore, the quicker adoption of technologies that allow for the transparent selling of data is key.

Beyond this, there is also a period in which advertisers with complimentary audiences should explore selling audience data. Building this mutually exclusive data relationship will not only increase access to exclusive data sets, but should also lead to high performing data segments as complimentary audiences are traded.

It’s clear the 2nd party market place has plenty of opportunity for both buyers and sellers and solves a lot of industry challenges surrounding 3rd party data currently. In fact, 2nd party data should be considered as a private marketplace for the transparent buying and selling of exclusive, high-quality data sources, and truly has the opportunity to become your most valuable resource in an audience focused market.

Looking for more information on 2nd party data? Read about Lotame Syndicate, our 2nd party data marketplace, or check out our Guide to Success with 2nd Party Data. For more information on GDPR, check out the recording of this webinar that Tiffany Morris, Lotame’s VP of Global Privacy recently presented.

 

by Natasha Sudar, Sales Manager – EMEA, Lotame