7 Reasons Why Third-Party Audience Data Spend Is Up

Marketing expenditures for third-party audience data and related solutions are expected to increase 17.5% year over year to more than $19 billion this year in the U.S., according to “The State of Data.” The  report was published yesterday by the Interactive Advertising Bureau (IAB) and its Data Center of Excellence.

Using data compiled by the Winterberry Group, “The State of Data” broke third-party audience spending into two categories: audience data acquisition and data activation solutions.

• Audience data acquisition represents the actual purchase of third-party data, in any form. Projected spend in 2018 is up 17.7% to $11.9 billion for audience data acquisition.
• Data activation solutions support third-party data usage, including management, processing and analysis. Expenditures for this category are estimated to rise 17.2% to $7.2 billion this year.

“The State of Data” also projected 2018 will be the first year investments in digital third-party data assets surpass expenditures for traditional or “terrestrial” third-party data, typically used for direct mail or other offline communications.

Third-Party Data Expenditures Are Climbing as Data Becomes More Accessible & Actionable

Marketing strategies and consumer behavior are increasingly online, resulting in more data generation, enhanced data accessibility and better data use practices. Here’s a look at seven trends boosting third-party audience data expenditures:

1. There’s More Data Now than Ever Before.

As more time is spent online, consumers are leaving more data crumbs behind. From web surfing to connected TVs to IoT-connected devices, there’s an increase in both the volume and granularity of the data being created.

2. Consumers Demand Personalization, and Marketers Want to Provide It.

As consumers have become more accustomed to personalized marketing messages, they’re increasingly demanding it. Marketers are looking to provide personalization across disparate channels and devices, and they need accurate data to make it work.

3. Marketers Are Spending More in Programmatic Advertising.

Online display media spend has been increasing more than 20% each year, driven in part by the capabilities and accessibility of programmatic advertising. Programmatic advertising requires the collection and use of consumer data. It also provides data to be used in future campaigns.

4. Marketers Want Premium Data, and the Good Stuff Costs More.

Marketers are increasingly valuing and demanding premium data for its accuracy, actionability and predictive capabilities. Premium data has always been more expensive than inferior data, but now the increased demand is pushing up prices.

5. Marketers Are Investing in Data-Based Marketing Technology Platforms.

The technology requirements for advanced use of third-party data are different than the marketing technology needs of yesterday. As a result, more marketing technology solutions, including data management platforms (DMPs) and customer data platforms (CDPs), are being introduced and leveraged to centralize data, perform identity resolution and make third-party data truly actionable.

6. Marketers Are Outsourcing Data Expertise.

Although marketing budgets have recovered from Great Recession cuts, marketing teams have remained lean. Third-party data and technology expertise is often outsourced as marketers realize the need to fill these gaps.

7. Privacy Concerns & Data Regulations Have Not Hampered Data Expenditures

Despite increased consumer and government scrutiny of data collection and usage practices, data expenditures continue to climb. Long-term impacts of the General Data Protection Regulation (GDPR), which went into effect earlier this year, are still undetermined. In the short-term, GDPR is believed to have enhanced data quality by eliminating non-compliant data providers. Some experts believe the California Consumer Privacy Act (CCPA), set to take effect in 2020, will drive similar change.

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