Scary, right? It’s a good thing we don’t have to live without those vital marketing tools.
But there is one piece of marketing technology that we’re all going to have to learn to live without, one way or another, and that is third-party data.
Third-party data–including data collected to help marketers optimize their programmatic ad buying–can help supercharge your marketing analytics. But a growing emphasis on data privacy and legislation against data brokers (entities that collect user data through internet cookies and then sell that data to businesses) has marketers scrambling for other options.
Programmatic advertising, in particular, will become much more challenging without third-party data, which helps marketing professionals hone in on exactly when to buy programmatic ads, where to broadcast them, and how much to spend.
But there is good news: with the right strategy in place, you can continue to run successful programmatic advertising campaigns without any need for third-party data.
In this guide, we’ll look at a few different types of data that you can use to continue improving your programmatic advertising campaigns, including user data that you obtain with permission, as well as user metadata that doesn’t contain any personal information.
What is programmatic advertising?
Programmatic advertising is a form of digital advertising that allows online advertisers to automate the process of buying and posting ads online. It uses big data, analytics, artificial intelligence, and automation technology to optimize online advertising efficiency and effectiveness for businesses.
How does programmatic advertising work?
In programmatic advertising, ad-supported streaming platforms make their digital ad inventory available to ad buyers, who bid on placements based on targeting options like region, time of day, and various demographics. When a buyer makes a winning bid, their ad is served to a targeted user and charged against the buyer’s predetermined budget. Ad buyers can tweak their targeting options and increase or decrease their budget based on performance.
Programmatic advertising without third-party user data
One of the primary reasons that programmatic advertising is so effective is that it uses real data from real consumers to give marketers accurate, actionable insights they can use to optimize their digital ad campaigns, and almost in real time.
That user data is like a magic potion for marketers, but a major source of that potion is gradually evaporating before our eyes as third-party user data disappears.
The question for online advertisers is: what’s your next move?
Unless you’re OK with giving your competition a massive advantage in the battle for online advertising views, abandoning data altogether is not an option.
This means that it’s not about replacing data in your programmatic advertising strategy, it’s about replacing the type of data you use.
Let’s look at a few different options for other types of data you can use safely to mine insights for your programmatic advertising campaigns.
First-party data
First-party data is data that you collect from your own network of customers after getting their permission to collect it. Because you’ve gained permission to collect and use this data, you don’t have to worry about running into trouble due to any upcoming data privacy legislation.
However, this doesn’t mean that you can do whatever you want with this data.
For example, when you collect sensitive data–such as names, email addresses, and credit card information–your business is still responsible for protecting that data, and your failure to do so could result in penalties, fines, and even jail time in extreme cases.
There is no one-size-fits-all set of rules to dictate exactly how individual businesses must handle and protect user data (these rules vary by industry and the area you do business in), but the European Union’s General Data Protection Regulation (GDPR) is generally regarded as the world’s most comprehensive and established set of data protection guidelines in the world.
So while the state you do business in may have its own set of data protection rules–like the California Consumer Privacy Act, for example–there’s a good chance that those rules were modeled after the GDPR. With that in mind, if you follow the GDPR principles on sensitive data handling, you shouldn’t have to worry about running afoul of any regulations, no matter what state or country you do business in.
Here’s a summarized checklist of the seven key principles of the GDPR:
- Lawfulness, fairness, and transparency. Did you get clear permission to use the data you’re using, and are you using it in a fair and honest way? This principle may seem a little open-ended, but it’s meant to serve as a catch-all. If you feel like you’re doing something wrong–like selling someone else’s private data on the dark web–you probably are.
- Purpose limitation. Even after you’ve obtained someone’s permission to use their data, that permission is not unconditional. You should explain why you’re collecting someone’s data when you get permission, and if that purpose changes, you’re obligated to ask for permission again based on the new purpose.
- Data minimization. Similar to the second principle, this principle states that businesses should only collect the data they need–and no more than needed–for a stated purpose. For example, if you’re collecting email addresses for your newsletter, you shouldn’t also be gathering user IP addresses unless it’s for a clearly stated purpose.
- Accuracy. If you’re storing personal user data, the GDPR says that you’re also responsible for ensuring the accuracy of that data. In other words, your database shouldn’t have misspelled names or mismatched email addresses.
- Storage limitation. This principle says that when you get permission to use someone’s data, it’s not a forever agreement. Data stewards should set a firm time limit for data storage–say one or two years–then either delete or get renewed permission to keep that data as needed when the time limit is up.
- Integrity and confidentiality. Perhaps the most important principle on this list, this one holds data owners responsible for protecting sensitive data from accidental leaks due to human error as well as external breaches from malicious hackers. If the sensitive data you’re keeping is compromised, you’re also responsible for alerting anyone whose personal data may have been leaked. This is one of many reasons why it’s so important to ensure cybersecurity best practices at your small-to-midsize business.
- Accountability. This final principle calls for businesses and organizations to keep records of the actions they’re taking and the policies they have in place to protect sensitive data. That way, if you are exposed to a data breach, you can prove to auditors that you’ve done your due diligence.
Second-party data
Second-party data is similar to first-party data, except that it’s not collected directly from the user. Instead, second-party data is another organization’s first-party data that is shared with your organization through data partnerships.
Here’s an example of what this might look like. Say, for example, that your marketing agency is working with a real estate firm to create an online advertising campaign. This real estate firm might share demographic data from their customer relationship management (CRM) database with you to help you hone in on a target audience for the campaign.
Keep in mind that your business and your data sharing partner are still responsible for protecting this data based on the GDPR principles outlined above. The original data owner is responsible for getting permission from users to share this data in the first place, and explain why they’re sharing it, and you’re responsible for protecting it while you have access and then safely deleting it when you no longer need it.
Metadata
Metadata is literally data about data, and it shouldn’t include any sensitive information about individual users. Examples of this type of data in the context of digital advertising include:
- The time of day that a user interacts with an ad
- The zip code where specific ads have the best conversion rates
- The age group that certain ads perform best with
- The CTV program that your ads perform best on
You can see how this type of user metadata could be very valuable when planning future programmatic advertising campaigns and tweaking those that are already live.
How to use first-party data and metadata to optimize your programmatic advertising
Now that we’ve identified a few alternatives to third-party data that you can use for programmatic advertising strategy, let’s look at a few tips for how you can best use that data.
When working with first- or second-party data–typically collected through their web analytics software, CRM database, customer service interactions and surveys, etc–marketers should generally focus on using that data to retarget high-value customer types with targeted ads.
For example, let’s say that 80% of your customers who have made multiple purchases in the last year are between ages 40 and 45. This is data that you should have access to through your CRM database and customer surveys without the need for third-party data. You can now retarget that customer segment by bidding for programmatic ads on platforms with high viewership from that age group.
Metadata, which is typically collected by the ad-supported platform and provided to ad-buyers, can help advertisers target increasingly specific audiences. For example, if a buyer’s ads perform best with males from the midwest between the ages of 18 and 24 who watch anime between midnight and 2a.m., they can continue targeting that specific audience segment along with similar segments.
A new approach to programmatic advertising
Whether we like it or not, paying for user data to build programmatic advertising campaigns around is quickly becoming a thing of the past. But as we saw in this article, there are other valuable sources of data that can be used to build an effective programmatic advertising strategy, all without having to worry about getting dinged for using personal data that you shouldn’t be.
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