Today's column is written by Mark Zagorski is CRO, eXelate
I applaud John Garber for taking this subject on in his very well written and interesting piece (read it) yesterday. Although I think many of the concepts are right on, including the nascent nature of data valuation models and the added value of context+audience in determining campaign success, I have to take issue with a few of the points, which I feel undermine the general premise of maximizing the value of audience data for publishers, and which ultimately may confuse media buyers.
First, the idea that “the risk is all on the buyer in a straight data buy” is true only in models in which data is purchased on a “per user” basis and it is then up to the buyer to find these users either via their own direct media sources or media aggregators. The pay-per-user model may work for buyers in some cases, but for the increasingly real time, DSP-console driven nature of media buying it doesn’t make sense. That is why eXelate (and other data companies) also built data models on a “pay per use basis”, in which data costs are only incurred when a user is “found” and successfully targeted. In these cases, there is no buyer risk, and the publisher (data provider) shares in the upside on every impression when its data is successfully used. In this manner, publishers are not the guinea pigs in a “data buyer arbitrage” game, but active participants in the sale whose value rises as based on the ultimate worth and incremental use of their data.
Secondly, the idea that media and data need to be smartly coupled to deliver value is right on the money, but the underlying assumption which is being made (I believe) is that the player managing both assets needs to be the same, and that if the data provider is not also contributing media to the “data engine” then there is a value loss. This to me is not so clear. Buying data and media together in a model that rewards performance and reach is not mutually exclusive with publishers contributing media and data to the same partner.
A few months ago, Ad Exchanger.com posed a question – “Should data and media be sold together by the same company?” As expected, all of the key players chimed in, each with their own take on the question and each with a self serving (myself included) view on what the best direction should be.
At the time my take was that I believed that there is always some level of conflict when you aren't a pure player in any sector, because at the end of the day you either (a) end up being competitive with your own customers or (b) fail to fully serve their interests. The key reason that data and media access were split in the first place was because of these inherent conflicts, and a main reason why independent data companies are thriving.
My position several weeks later (that’s 5 years in internet time ) remains the same. With the proliferation of media platforms, and the ability for smart data companies to integrate into these platforms, there is no need for data companies, and the publishers who work with data companies, to get into the media business together. Contextual filters on DSPs and media exchanges enable the type of targeting that can enhance the performance of data thus driving higher ultimate value for the data provider. Plus, when data and media are combined in these separate platforms, data source names are anonymous and data pools are aggregated in order to mitigate channel conflict. So, there is none of the uncomfortable concerns that the guy sitting next to you in the waiting room of the media agency is selling your own audience against you (and knows exactly who you are).
Additionally, a fast way for publishers to lose data value is for a current data buyer to walk away from a data platform or provider because they are now in the media business. As one of our partners quipped recently – “Let me know if you guys get into the media business, because if you do, this is our last lunch, even if you are buying!”
Because of business model variations and the potential for channel conflict, I think it is too early to make a call for the combination of data plus media from the same sources in the same marketplace. In our rapidly growing online advertising ecosystem, where we see company models change at will and whole new market segments spring up overnight, my take is that publishers should carefully consider if this direction is a short term branch in the evolutionary chain or a long term shift in market direction, before they take the leap.