Three Steps to Growing and Monetizing Your First-Party Audience Data
The digital advertising ecosystem is going through a major shakeup. Public outcry and far-reaching privacy regulations have spurred tech vendors to initiate the deprecation of third-party cookies, pixels, and device IDs—the glue that held the programmatic infrastructure together for the past 20 years. In the process, millions of publishers of all sizes are about to lose their primary sources of ad revenues.
So what now?
Many publishers are currently playing a combination of defense and offense with their data strategies, according to Dan Hallac, Chief Product Officer for Hearst Newspapers. They need to play defense because their existing ecosystems are being challenged by the deprecation of third-party cookies. But they also need to play offense to give their first-party data a starring role in the new ecosystem.
For publishers large and small, the opportunity in front of them is not just to fill the void left by third-party cookies, but to develop more balanced and profitable partnerships with advertisers. Cookies and device IDs are impersonal identifiers, after all. After years of commoditization of their ad inventories, publishers are finally getting a chance to structure deals around the value of their audiences, not blind impressions. Their users have unique traits and interests that make them particularly attractive to brands looking to strike a meaningful (and profitable) connection with consumers.
First-party data takes center stage
Let’s take The New York Times (NYT), for instance. The company hasn’t entirely given up on programmatic advertising, but it has developed its own platform for direct-sold ads based on first-party data. And it’s using regular surveys and machine learning to segment and activate that first-party data. Context is important, and NYT advertisers can target users by interest (e.g. business, fashion, art, diplomacy), motivation (e.g. financial literacy, watching a new movie, improving one’s wellness), and anticipated emotions (e.g. optimistic, adventurous, self-confident).
The NYT isn’t the only publisher on that journey: Vox Media, The Washington Post, and other notable publishers are shining a bright spotlight on their first-party data and upgrading their marketing technology stacks and strategies accordingly.
They’re all large publishers though. The NYT, for example, has 8 million paying subscribers and millions more who are registered users. Its website alone received more than 350 million visits in August 2021, according to Similarweb. It makes sense that a publisher with such a large footprint would be able to divvy up its audiences into interest groups and still retain enough scale to attract advertisers. But what about small or mid-size publishers?
Size doesn’t matter
According to a recent Forrester report commissioned by Permutive, 95% of US- and UK-based publishers have started building new monetization strategies around their first-party data. Only 28% have an established monetization strategy fully in place, but nearly every publisher today (small, medium, or large) has recognized both the need and the opportunity.
On the other side of the fence, brands are playing ball: They too value their first-party data, and want the best match for their ad dollars (isn’t media buying a giant game of matchmaking, after all?). At this stage, most brands (80%) have an active direct relationship with at least one publisher, according to the same Forrester survey, and nearly half have five or more such partnerships on the board already.
What’s the impact on CPMs?
The jury is still out on what these new direct relationships are doing to CPMs—still an important part of the media-buying equation, even if they're not the end-all solution they once were. Having the ability to target audiences that are a good fit for their brand (and therefore more likely to convert) means advertisers should pay a premium for them. But audience segments can be so narrow that no one else is competing for them. And less competition generally means lower CPMs.
For small and medium publishers that don’t have the scale to attract deep-pocketed advertisers on their own, there’s a real risk that small audiences, even of high quality, may actually translate into lower CPMs in a cookie-less ecosystem.
So, what are publishers to do today? They should go on a three-step offensive:
Step 1: Get to know your users and patch up your first-party data
What is the nature of your direct relationship with your customers, and when was the last time you took a close look at your first-party data to see if it was accurate? Depending on your business model, you might have authenticated subscribers (paying or not), anonymous users, or a combination of the two. Do you have a clear idea of how many of them are currently active? If you have a profile for them, can you trust the information in that profile? Is it complete? Does it include demographic and psychographic data that's relevant to your brand partners?
You need to do a comprehensive audit of your first-party data, and team up with the right identity resolution partner to fill in the gaps and address key data challenges before they paralyze your marketing efforts.
Brands are waging their own data quality battles—90% of CRM data is incomplete, 70% of it becomes erroneous within a couple of years, and 20%-40% is duplicated—and they too are in the process of assessing the impact of ID deprecation on every single one of their media integrations. The last thing they need is fuzzy data from the publishers they’re looking to do business with.
Step 2: Connect your first-party data to the new ecosystem and value it for what it’s really worth
The new advertising ecosystem is likely to involve a portfolio of solutions to connect datasets across channels, technology, and data players. IDs are multiplying, a new generation of martech tools is emerging, and the only way for you to make sense of that complexity is to embrace a unified identity framework. It will allow you to build bridges across all your channels (e.g. websites, apps, podcasts, newsletters) and sister publications, but also connect your first-party data to clean rooms, second-party data marketplaces, and other third-party data providers to enrich your user-profiles and maximize the value of your audience.
Your segmentation and audience insights are only as good as the data you feed into your algorithms. Neustar Fabrick™, for instance, allows you to enrich your first-party data and test it out immediately across your most critical marketing applications: from segmentation to activation, personalization to measurement. More importantly, it allows you to stay on top of an advertising ecosystem that's growing more complex by the minute.
Step 3: Measure the right outcomes to unlock new monetization opportunities
Impressions have always been a surrogate for other metrics. Marketers want to improve brand awareness, consideration, purchase intent, sales, return on ad spend, and dozens of other industry-specific outcomes. The cookie ecosystem appealed to the lowest common denominator, but identity is making it possible to open up the whole playbook.
You want to line up your performance metrics with your advertisers’ expectations. Ask them what they’re really looking to accomplish with their marketing campaigns, and very few will say they’re just trying to reach eyeballs. If you want to maximize your monetization opportunities, you need to be ready to measure every campaign against a different set of outcome metrics.
Having second thoughts?
But wait, these are substantial changes requiring sizable investments. Isn’t there a chance that the industry will somehow band together and roll back the clock?
That's not an option. The wheels of consumer privacy are only turning in one direction. Already, app developers who wish to use IDFA (Apple's device ID) to track users across apps and websites need to first secure their consent. On the open web, Google’s decision to stop support for third-party cookies in Chrome has been postponed until at least 2023, giving industry players heavily invested in the current ecosystem more time to adapt. But two years go by in the blink of an eye. Now is the time for marketers, publishers, and all other data and technology players in the ecosystem to wean themselves off a 20-year cookie diet.
The future of media is here
Despite all the alarming headlines, the future promises a much more harmonious partnership between buyers and sellers than anything we’ve seen over the past 20 years. But the top brands in the world will not waste time on media properties that are not fully plugged into the new marketing ecosystem.
Check out our vision for the future of media, and please contact us to hear more about how leading publishers are taking steps to acclimate to the new normal. We're here to help you make all the right moves.