Third-Party Data: Are You Asking the Right Questions?

HiRes_DataKey-1024x1024Have you tried adding third-party data to your digital targeting campaigns only to realize it didn’t help?

There are vendors in the ecosystem who claim third-party data is optimal for audience targeting, and then they don’t deliver.

Third-party data is an additional marketing expense, and the value of that information must justify all the costs: cost of data, opportunity costs, personnel costs, etc. Those costs are only justified when you can prove that data helped meet your specific marketing objective.

If you’ve tried using third-party data and it didn’t work, here are five questions that will help set you up for success:

How will you measure the success of your data?

Before you get started, you should identify the specific objectives you expect this data to work towards. Are you looking for new customers, or are you trying to get smarter about your existing customers? Do you want the data to help you find people who are in-market today, or people who have the characteristics of a great customer, regardless of the behaviors they are showing? Once you’ve identified your objectives, bring them to a vendor who understands them, and who can build a perfect targeting strategy to facilitate them.

Are you using the right type of data to achieve your goal?

In order for the data to add value, it must align with your goals. There are two general classes of third-party data to consider: behavioral data and profile data. Behavioral data is “what” people are doing and profile data is “who” they are, including demographics, hobbies, financials, etc.

Get the ultimate guide to distinguishing behavioral data from profile.

If you’re looking to use data to help you identify online users who are in-market and looking to purchase today, there’s a lot of great online behavioral data that can help you find the people who are showing interest in your product or service right now. For example, an anonymous cookie gathers data about where the visitor is spending time online as well as geographic details, yet a typical cookie has fewer than 50 different pieces of targeting data available.

Compare that to the data needed to find new prospects who aren’t showing purchasing signs today but who are a great fit for your product or service. To find those people, you need data that focuses more on who the person is, versus what behavioral signals they are showing online. Offline profile data providers have access to 1,000s of data points per profile and can find all the attributes your best customers have in common. If your data goals include the ability to prospect for new customers who will spend more than the average consumer, profile data is the way to go.

Data is a powerful tool that is most effective when based off all the attributes you know to be valuable about a consumer.

Can the data scale?

Data coverage is critical and refers to how much of the population is covered by the data. A highly predictive data point that does not have good coverage will not scale. For example, you might find that left-handed people who like ice cream are great customers, but if your data coverage is limited and you can only get ice cream-lover data on four percent of the entire population, then the data is not very useful.

Is the data accurate and stable?

When looking at data providers, you should be able to easily understand where the data comes from to ensure that it is based upon verified sources, not inferred data. You should also make sure the data is consistent and available over time. Also, ask if the data provider cross-validates the data. Cross-validation happens when a provider who is using multiple sources for data compares the different sources to find consistencies and discards those which are inconsistent.

How will I know if the data drove measurable results?

Data providers who have the ability to help you measure lift and prove ROI of the data often have the ability to set up closed-loop tracking to help you better understand how the data improves your targeting efforts. Best practices require the use of test/control methodologies to help you answer the question: Did the data drive incremental results above everything else I’m already doing? The right data provider will be able to measure the effectiveness of the data by showing a positive lift based on your goals.

Make the decision

The answers to these questions will help lead you to the right data vendors for your marketing strategy. Cross-validated data makes your data more accurate. Accurate data based on all desirable attributes will help you identify and reach consumers who are on target. Reaching and converting these consumers directly improves your ROI, which inherently aligns third-party data with your digital marketing strategies. Ultimately, a transparent data vendor who can answer all these questions in simple language and does not talk about black boxes or secret sauce is critical for a successful data targeting strategy.

Pete LaFond

About Pete LaFond

As chief marketing officer, Pete leads TruSignal’s marketing group, including marketing strategy, brand and acquisition advertising, product and vertical marketing, events and conferences, social media and public relations.
This entry was posted in Articles, Data & Audiences and tagged , , , , , , , . Bookmark the permalink.

Comments are closed.