October 04, 2016
IAB Training Series #8 Part 2 -How Data is used in Advertising?
Alex Sibois, Managing Director, APAC Lotame & IAB SG Data Co-Chair
To break down how data is optimised by advertisers, we have to first understand how it’s divided into sources and ownership, and each type is equally influential in marketing activities.
First party data is the most valuable because you already own it. It pertains to anything that’s being generated across the company that gathers information and this is where the real value of leveraging data comes from. For example, if a marketer’s running a website, first party is anything that happens within the site such as search, content consumption, or clicks creates information and data points. CRM is another source where you can gather information from existing clients, and details from the company you run and the performance coming from it.
Second party data is shared through partnerships and connections in a secured manner where both parties benefit from the information provided by the data. Take the partnership between some airlines and hotels as an example. If a user travels to Tokyo in first class, chances are, that same user will stay in a first class hotel, and vice versa. With this data, each business will know the right people they need to send their ads to. Hotels and airlines are interested in such information to easily direct their campaign to the right market. Each partner is leveraging one another’s insights to better target their existing and prospective clients.
Third party data
is a business of its own. Many companies are using third party data to aggregate information and make it easier to access. It provides broader reach, social information, and location-based data sets, which are used more today in the mobile environment. Third party data allows you to get a more holistic picture of your audience even when they’re not on your specific website or property.
Perspective of different use cases
Marketer’s perspective: The main goals of a marketer when using data is to first acquire new clients by improving customer acquisition efficiency. Second, is to deliver better conversions by working on campaign performance. The third and fourth goal is to ensure consistent messaging, and deliver sequential messaging across initiatives and channels. Lastly, marketers leverage data to optimise content personalisation for better user experience.
To increase performance, different technologies and concepts are being used by marketers today:
Lookalike model: Marketers use first party data and enrich it with second and third party data to create a more holistic picture of both existing and potential customers. Essentially, it allows the marketer to figure out patterns within his audience and spot other people who are similar to his “best” users (those who consume/ convert the most) and could potentially convert and become new clients.
Frequency capping :This method restricts the number of times your ad appears to the same person or same device. It’s cost-effective and allows you to expose the user across multiple devices in a reasonable manner and optimise conversions without exploiting the same user repetitively.
CRM retargeting: Enables an advertiser to use CRM data to customise a campaign’s message to better suite the interest of a particular user. If you’re targeting a frequent flyer from Orlando to San Francisco, instead of just saying ‘Low fares on hundreds of airlines’, you can also add ‘Find flights from Orlando to San Francisco’. Tailoring an ad message depending on a user’s habit will more likely increase conversion rates because the prospect will connect more with the message.
Retargeting audience segments: A marketer will tap into its properties to build profiles according to the progression within the purchasing funnel and changes the messaging depending on what stage of the customer journey the user is currently at.
Sequential messaging: Shows the right message a number of times, sending a sequence of messages that build on the previous one. Campaigns are being retargeted real-time.
Publisher’s perspective: The ultimate goal is to resell the traffic at a premium to marketers. This provides targeting capabilities, and ensure that campaigns are converting better on your sites than on someone else’s who doesn’t leverage data. It allows companies to understand how content is being consumed and how they can expose the user to content that he prefers.
Data has changed the way publishers think - their business is no longer about selling xx amount impressions, but rather to sell audiences. So it’s important to determine your audience. Gather a group of people, identify who they are, what they like to do, and how you can reach them so that it creates value in return to the marketer in terms of targeting and conversion rates.
In advertising today, it’s not just about collecting data, it’s about creating content that is useful to audiences.
Collect the data, enrich it, and leverage.
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