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This oil and data analogy has been around a while and with good reason, as most of the biggest winners of the last 10 years didn’t win just because of the web or technology. They won because they understood the power of data. From Facebook, Uber or Amazon down to thousands of smaller disruptors, they nearly all have a foot firmly in advanced data and analytics.
The analogy was used again recently at the Digitech conference. Data, data, data was the message from various speakers.
And, of course, they are right. Data is what will differentiate winners from losers over the coming years.
However, understanding that data is valuable isn’t the same as being able to extract it, refine it and use it effectively. To do that you need a high-performance machine that runs on this new oil and creates value.
An example is in publishing. David Lane, chief strategy officer at Seed Media, explained during his session at the Digitech conference why the current approach is wrong:
“We’re looking at publishing and data through the wrong lens. Most companies want more data, but most use what they already have badly. Instead of thinking how can we add value to our business we need to think how do we add value to our customers first. One leads in time to the other.”
This means changing the way we look at data. For example, pouring more and more into the programmatic bucket is just a race to the bottom for everyone except the data platforms. That’s not to say there is no value in programmatic advertising but it isn’t the long-term answer to all the problems advertisers and publishers face. In fact, the way it’s being used today it’s just adding to them.
A MediaPost article on programmatic TV from last year sums this up well: “Publishers ‘working’ was no longer defined by the depth of the consumer attention their content earned – but rather, how quickly a publisher could transfer this consumer attention to an advertiser’s website. Publishers were now incentivised to produce content ‘just good enough’ to borrow consumers’ attention long enough to flip it instead of owning it. Ehow.com was a perfect example of this new paradigm. Programmatic is all about ad buys based purely on audience targeting. By default, content value is eliminated and the new-media definition of a publisher ‘working’ gets further entrenched.”
The truth is, most of the money is being spent throwing 1 trillion lumps of irrelevant content at potential customers, hoping some of it sticks. As one data scientist put it:
“Statistically speaking, the response rate is zero.”
Of course, data is so much more than programmatic. It’s used to power other marketing channels, customer service, CRM, digital services, ABM sales platforms and much more besides.
The core principle remains valid, regardless. Wherever and however data is deployed in the enterprise, it needs to add value to your customers first.
The advertiser dilemma
So where does this leave advertisers? It means they need to focus on building a data infrastructure that they own. The need to focus on 1st party data as the primary data asset, they need to build internal centres of excellence around data science and analytics, they need a customer-first approach when deploying data and they need to focus on efficiency of delivery and conversion to protect the bottom line.
Essentially they need to ‘flip the funnel’, as first laid out by Seth Godin in his free ebook from 2006. This model works with slight modifications for both B2C and B2B – where it’s called Account Based Marketing (ABM) – find out more in our report about why data is your passport to ABM success.
We must remember that strategy is deciding what not to do while achieving the same result. Customers are overwhelmed with data driven marketing in all its forms. The future must be where we reach less of them, but we do so in a more engaging way and at a time that is relevant. If I’ve just bought a car, why should I see car ads for the next 3 years? Until I signal that I’m back in the market, it’s a waste of time, money and consumer capacity.
Joe Marchese sums up this dilemma in this great video:
This nominator/denominator perspective should resonate with us all. Customers will continue to opt out of marketing through ad blockers or subscription services unless we all wise up and create value in our marketing.
The publisher dilemma
The age of publishing as we have known it is over. Pure publishing was a thing when the publisher controlled the information network (journalists, editors, photographers) and the distribution network (printing press and physical sales points). Without these, it was hard to become a publisher, so value was created and this allowed publishers to wrap their content in advertising and charge for it.
Now everyone, not just publishers, is publishing content. There is no cost of entry, as everyone can be a journalist, editor and photographer. There is no need to print your content and distribute it.
David Lane from Seed Media believes publishers need to take a different approach in the future:
“In the age of data personalisation and niche interests, in both our personal lives and business, it’s about building communities and, with it, trust.” Once you have these you can then build a business around it: “We continue to push content at people, not engage them in the process.”
This was summed up by Andy Fletcher from Johnston Press:
“Don’t target me, ask me.”
Publishers need to stop focusing on reach and audience and start creating content and experiences that engage. Advertisers will need to be educated about this new approach:
“It’s not about how many people are seeing your content, it’s about how many are listening and understanding.”
Research among more than 4,000 Forbes readers in the US backs this up. Readers who were asked to view interactive webpage content featuring brands such as SONY, Maserati and Boeing, followed by a post-exposure survey, had much better recall of the brands versus those exposed to just digital advertising. They also had a higher recall of the topic being discussed and were more likely to seek out more branded content from these companies, based on this exposure.
The data specialist dilemma
Many advertisers and publishers at the Digitech event in London earlier this summer stated clearly that it was time to focus on 1st party data, not 3rd party data. I didn’t take this to mean they would be excluding external partners, just not relying so heavily on them. More importantly, data partners need to add real value and be accountable.
This means understanding their client’s business in depth and adding to the data recipe in ways that enhance the sales process and the customer experience.
One brand-side client, who wanted to stay off the record, told me:
“Most data partners we work with are – frankly – behind the curve, peddling used goods that have little value. They don’t understand our long-term goals, or they’re scared of it, as it involves more data autonomy. Quality control is poor which, with GDPR steaming in, is unacceptable.”
It’s clear that the data services industry needs to up its game. Disruption in the wider ecosystem is disrupting their industry and there will be winners and losers as this plays out.
Many of the key players know this. MeritDirect, Aberdeen Group and Acxiom have all briefed the GMA on exciting new products and services being built and rolled out right now. However, many others don’t.
Changing of the old guard
The truth is that the data driven world is changing:
- We have more data than ever before, but less insight.
- We need more data driven people, but have a skills shortage.
- We have more uses of data, but using it risks alienating the customers we rely on.
- We have more legislation, but less understanding of what that legislation means to our businesses.
As an industry, it’s important we find the answers to these questions. If we don’t, others will try. Legislators are already knocking at the door and many are threatening to get more involved – and often with good reason (if also with poor understanding and execution).
As Jed Mole, European marketing director at Acxiom, said:
“If we leave it to the powers that be, we’ll end up with ‘a race to random’ when it comes to data.” This benefits no-one. The customer least of all. “Data allows competitive activity and allows new entrants to compete with established players. It’s genuinely non-competitive to restrict access to data,” he added. “How can smart, innovative companies take on data-rich monopolistic businesses if they can’t use the power of data?”
The power of data: creating the engine for data to run
The new model needs to be based not around how much data we have, but about how we use the data. It should not be about how much advertising we can push out, but how little we can to achieve the same (or better) result.
Yes, that does mean putting in place the technology and processes to support this new model. But, critically, it means creating a culture within your organisation that understands both the value of data and the dangers to the business if we continue to ‘exploit’ data and deliver bad customer experiences. That path leads only to more ad blockers, more opting out, more legislation and, ultimately, the loss of access to our customers.
I don’t like the sound of that possible future.
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