Demystifying data driven advertising | Choozle UPFRONT
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Feb 19
Demystifying Data

Demystifying data driven advertising

We are entering a new digital advertising era where data will be more important than the creative message that drives the consumer. A few years ago, the main job of a marketer was to make attractive ads, billboards, and engaging taglines, but the digital age forced the marketers to adapt and to use technology to dispense their messages. Today, marketers have a different kind of job: they have to collect, analyze, and crunch data of all forms.

The shift to digital technologies has evolved consumer data that is available to marketers. Every click made, purchases added to a cart, emails opened, flights booked is helping marketers understand a consumer’s interests and behavior. This data driven advertising age has brought heaps of consumer data from online and offline sources that can be used to craft the perfect strategy and target audience. But with this much data, it’s very easy to get overwhelmed.


What is data driven advertising?

We generate tons of data every second through our website page visits, videos watched, likes, comments, tweets, search history, purchases, surveys completed, pictures uploaded, and so on. Beyond your activity on the internet, we generate a lot of offline activity as well. In-store purchases, the frequency of purchases, motor vehicle registration, voting behavior, and so on. This data that we generate creates a robust view of who we are as individuals, a family, or a business. Before you start freaking out, a large majority of your data is collected, anonymized, and encrypted. Meaning, it can’t be pinpointed back to you individually but instead grouped together with an identifier, such as cookies, user IDs, or emails.

Demystifying data driven advertising
With access to more and more data, the strategy of data driven advertising creates a huge opportunity for marketers. But with any opportunity, there comes challenges. According to the fifth annual “Getting Media Right” study by Kantar Millward Brown, less than half of marketers are confident in their ability to create insights from integrated data. Even within agencies, less than 20 percent are very confident, indicating the industry is struggling to take advantage of the data opportunity.

The data opportunity doesn’t end with marketers, consumers are feeling the impact as well.  Issues around data privacy with Facebook’s Cambridge Analytica scandal and EU’s GDPR regulations have brought data to the forefront of news coverage and opinion for consumers.  According to a new survey by ExpressVPN, seventy-one percent of U.S. consumers worry about how brands collect and use their personal data and 34 percent don’t trust tech companies with their digital privacy. Amazon was the most-trusted technology company at 30 percent, followed by Google (27 percent), Apple (22 percent), Microsoft (22 percent) and Facebook (19 percent). The least trusted were Uber (five percent), Snapchat (six percent) and Twitter (eight percent).  Moreover, nine out of 10 Americans worry about online privacy and data security, with 54 percent citing identity theft and 16 percent credit card fraud as top concerns.

As consumers get savvier and become informed, marketers have their work cut out for them in setting consumers’ minds at ease. Using data driven advertising strategies,  marketers are given the opportunity to be transparent about how they use data and use it efficiently within their digital advertising campaigns.

The value of data in digital marketing

If used correctly, there are many benefits of data driven advertising strategies– catering to consumer preferences, ensuring relevant communications, anticipating needs in convenient ways. These strategies enable marketers to have meaningful engagement with consumers and, hopefully, increased business results.

Collecting and segmenting consumer data allows businesses to not only better engage existing customers with relevant communications. Data allows businesses to align their messaging to the needs and interests of their audience. When following these best practices, customer engagement research shows that organizations using customer analytics average a 14.6 percent annual increase in positive mentions across social media channels.


Types of customer data: Third-party data and first-party data

First-party data

First-party data is data that a business collects directly from its customers— or in other words, “owns.” First-party data is unique to each business as it is based on what they collect from their customers.  Therefore it is no surprise that markers are looking for ways to harness this data. A study done by Forrester Consulting shows that 87 percent of U.S. digital marketers cited first-party data as the most critical source of data.

For example, one company’s first-party data might include demographic information, email addresses, purchase history, website interactions (from only the company’s website), ad impressions, and more. This data could be collected from a variety of places:

  • Marketing automation (e.g., newsletter sign-ups or forms filled out)
  • Social networks (e.g., brand affinities, profile information)
  • Ticketing providers (e.g., past ticket purchases)
  • Shopping carts  (e.g., past purchases, items viewed)
  • Mobile app and website usage (e.g., pages visited, time on site, referral sources)
  • Beacons (e.g., areas of a venue visited)
  • CRM data (e.g., email content, sales engagements, demographic information)

Why is first-party data a big deal? Any of these first-party data sources host a wealth of data points on the consumer. But marketers are looking to unify and centralize this data so they can get a single view of their customers. If they are able to combine that data in an actionable way, though, first-party data delivers amazing results. With all that data in one place, marketers can better understand how customer behavior impacts their purchase decisions.

First-party data can be the foundation for a larger, data driven advertising strategy that can help marketers achieve lower-funnel objectives, such as cart abandonment, customer loyalty, retention, and upselling. But it can be overwhelming if tackled all at once. Therefore, marketers should break down their strategy into specific objectives, tactics, and data required to execute for the strategy. For example, if the specific goal is to “decrease cart abandonment,” then retargeting will be an outlined tactic along with the data segmentation of consumers that have abandoned carts.

Third-party data

Third-party data is data that is collected from the customer by a company that isn’t directly involved in the transaction— or in other words, “not-owned.” Third-party data is the collection and aggregation of consumer behavior and demographic information that is collected by data providers and entities, like Oracle, Blue Kai, Exelate, Mastercard, etc. Often times, third-party data is generated on a variety of websites and platforms and is then aggregated together by third-party data providers. Data providers then sell this aggregated, anonymized data to marketers to facilitate targeted digital advertising.

Third-party data provides a depth and breadth of information that enables marketers with the ability to scale their digital advertising efforts beyond their “known customers.”  There are limitless options and sources available with third-party data. This data could be collected from a variety of places and include:

  • Opt-in online tracking
  • Browsing behavior
  • Purchase behavior
  • Buying intent
  • Cookie-based tracking
  • Census information
  • Social activity or social influencers
  • Survey responses
  • POS activity
  • Public records like voting history, house purchases, vehicle registration, etc.
  • Offline transaction data such as loyalty cards

When third-party data has been discussed in the industry, the conversation has at times landed on the controversy surrounding its accuracy. This is exacerbated by the lack of an industry-wide consensus on data gathering methods. However, there are some core questions that marketers should evaluate when using third-party data to understand how the data is collected and modeled.

  • Where does the data come from? Ample data about your audience is worthless unless it is reliable and accurate. Find out if the data is collected online or offline as well as comes from sources that can be trusted. Does the provider collect its own data or obtain it from other parties? What type of other parties are involved?? Is the data user submitted or inferred?
  • How regularly is the data refreshed? Depending on the variety, data can go out of date almost before it goes into use. What’s the point in using out-of-date data? Be sure to ask how often data is refreshed.
  • What privacy protections are in place during the collection and delivery process? With the spotlight on Personally Identifiable Information (PII) and General Data Protection Regulation—from Congress, the FTC and privacy advocates alike—it is imperative that everyone involved understands the methods of data collection. While full disclosure of data collection and distribution is now standard, there are additional questions marketers should ask. Is the provider a member of NAI or IAB? What are the public perceptions of the company?

The value that third-party data can provide is a larger potential reach for marketers and their message. Third-party data can be used in many different ways but it is best used for middle to upper-funnel initiatives like brand awareness or educational campaigns. While third-party data may be losing some of its glamour due to rising data privacy concerns, few marketers can rely on first-party data alone to power their biggest campaigns. Third-party data is still a necessity for many marketers. In fact, a 2018 survey of 226 CMOs worldwide conducted by Forbes Insights and The Trade Desk, nearly one in five respondents said that one of their top data challenges is not having enough third-party data to scale their digital advertising campaigns

As consumer behavior changes, so will the data that they produce. Marketers should look to maximize data to power data-driven advertising. Innovative advancements in technology paired with evolved expectations from consumers have truly revolutionized the way marketers (of any size or budget) can apply data-driven insights to more effectively advertise to consumers. Marketers no longer have to rely on what worked in the past to make educated decisions. Instead, they’re empowered with data to make smarter decisions that provide tangible results.

About The Author

Megan Sullivan-Jenks is director of marketing & communications at Choozle – Easy Digital Advertising®. A self-proclaimed tinkerer, Megan's a problem solver for marketing and advertising strategies and execution. From nonprofits to consumer goods and software, she's an expert at creating online and offline marketing & communications strategies that are engaging and results-driven. Outside of the office, Megan rolls up her sleeves to enjoy all things DIY like sewing and woodworking.