Where Does the Bumpy Road of Third-Party Data Go From Here?
Properly leveraging data isn’t easy, especially when the data’s reliability can be thrown into doubt. It is for this reason that third-party data – data purchased, sight-unseen, from an unrelated third-party – is easily scrutinized.
It is for this reason, some companies and associations have been shying away from the use of third-party data. This has thrown the future of third-party data into question. Where do the roads for this type of data lead, and is there any hope for its usage in the future?
With data, you don’t simply have lists, what you actually have are layers of opportunity that if peeled back can uncover an abundance of information and knowledge available for an association’s use. There’s much to learn about the proper leveraging of data.
While first- and second-party data is culled from sources and data pools that a company at best controls and at worst is at least familiar with, third-party data is different. Third-party data is purchased from an external, third party source with which the company may or may not have an actual relationship.
It’s for that reason that third-party data can be extremely unreliable.
According to a Digiday article, a results of a study showed that third-party data wasn’t as reliable as some marketers believe: “ChoiceStream found that a particular data vendor had identified 84 percent of users as both male and female. While that case was an extreme outlier, ChoiceStream also examined the two vendors that were least likely to identify people as both male and female. By getting the third-party data internally from the vendors and syncing IDs across datasets, ChoiceStream found about a third of the time the two vendors disagreed on what gender an individual was.”
The reason this still occurs in our digital world, where information seems to constantly pulse at our fingertips is because of a fervent and results-based need for quantity over quality.
“In a thirsty quest for scale, marketers abandon their concerns about certainty. And middlemen are paid based on their number of transactions, and not upon their accuracy. While advertising’s tech capabilities may have gotten much more sophisticated in recent years, priorities haven’t changed as quickly.”
While there are those who disparage third-party data, it shouldn’t be entirely counted out as a tactic for reaching consumers.
According to emarketer.com “In an April 2018 survey of 522 brand marketers in the U.S., the U.K., France and Germany conducted by Sizmek, 85 percent of U.S. respondents and 75 percent of respondents in Western Europe said that increasing their use of first-party data is a high priority.”
“While third-party data may be losing some of its glamour,” the article continues, “few marketers can rely on first-party data alone to power their biggest campaigns. Despite the ominous headlines, marketers’ use of third-party data hasn’t dwindled.”
“Data aggregator Acxiom got purchased for $2.3 billion in July this year, and just 11.4 percent of U.S. marketers surveyed by Duke University’s Fuqua School of Business, American Marketing Association (AMA) and Deloitte in August said they plan to cut back their third-party data usage in the next two years.”
It seems that third-party data still has its place if used properly.
Still, be cautious
While it seems that third-party data, with all of its flaws, isn’t going anywhere just yet, companies should continue to be cautious in its use.
For example, Marcus Pratt, Mediasmith’s vice president of insights and tech, noted that in recent years some vendors have expanded their offerings to include data packages at various levels of scale and accuracy. These vendors are more upfront about which packages have the least accuracy. So if advertisers want more accuracy, they can choose the product that best suits them.
And if you’re purchasing third-party data, be sure you have a way to verify the accuracy. There are many verification tools on the market to help with this.
At a Multiview’s Nov. 29, 2018, Data Symposium, David Ricciardi, Proximo, stated that people are still “putting their toes” in the waters of third-party data as an analytical test because they want to build profiles.
“However,” he continued, “it’s important to remember that once you’ve acquired the data, governance becomes important. You have to be very careful as far as who decides what you tell your customers about the information you now have of them.” Data governance – or the management of the usability, availability, integrity and security of data – can help weed out bad data.
According to an article by Kabir Shahani CEO, Amperity, “Third-party data should…be used sparingly. That said, it’s an asset you shouldn’t ignore. Once your first-party data is unified and available, you can intelligently assess where you have gaps by applying a surgical approach to third-party data purchasing. Pay for only the data that you really need, and that will power your unique use cases. That’s when third-party data investments really pay off and help you even the score with bigger tech companies.”