The current state of advertising data, in 5 charts
How advertisers collect, store and use people’s data is being scrutinized more than ever, in large part due to the General Data Protection Regulation. Starting May 25, businesses will need explicit consumer consent to use their data. This is more of a headache for the use of third-party audience data than first-party data that comes directly from the publisher.
Here is a look at the current state of data in advertising, in five charts.
U.S., Canada lead in data spending
Advertisers use three types of data to target digital ad campaigns to the right people: first-party, second-party and third-party. The markets where advertisers spend the most on all three types of data are the U.S., Canada, U.K., China and Japan, according to a report by data research firm OnAudience.com. The report also includes spending connected to the gathering and managing of first-party data — meaning DMPs, along with all second-party and online campaign data.
Big-data spenders love programmatic
Unsurprisingly, the markets that spend the most on programmatic and general display advertising also spend the most on audience data. The U.S. and China lead the pack, with $31 billion and $6 billion, respectively, spent on programmatic advertising in 2017, according to OnAudience.com. The U.K. was third with $4.4 billion in programmatic spend in 2017, followed by Canada, Germany and France.
Use of second-party data on the rise
Most advertisers use some type of online data to target their ads, whether it’s based on behavior, demographic, interest or location. Anonymous first-party data is the most common, with 71 percent of advertisers using it globally, but is growing the slowest of all data types, projected to grow 5 percent over the next two years, according to a Salesforce report. In the Asia-Pacific region, use of first-party data is expected to shrink by 9 percent.
Second– and third-party data partnerships, which let advertisers tap into data sources they don’t own, are projected to grow faster. Second-party data, formed when publishers share audience data with advertisers who then overlay it directly onto their own data, is expected to shoot up 26 percent over the next two years, when it will be used by 64 percent of all advertisers, driven by the desire to work directly with publishers. Under the GDPR, it will also be easier to make second-party data partnerships compliant than third-party data. Advertisers’ use of third-party data, which marketers buy from a range of external sources that don’t have a direct relationship with the consumer, is also set to rise by 30 percent in the next two years, according to the same report.
Tech giants dominate logged-in data
There’s a new battle in Europe to own consumer log-ins at scale, in part triggered by uncertainty around how the current ePrivacy Regulation proposal will require companies to change how they gather data. In Germany, that’s leading companies to collaborate on building mass consumer log-in platforms to rival the massive databases of logged-in consumers that the likes of Facebook and Google already have. Many believe the current draft of the ePrivacy Regulation will favor companies with large log-in databases, which means Google, Facebook, Amazon and Apple. Facebook claims 2.2 billion users worldwide, who have to be logged in to use the platform. Google has seven services, each with more than 1 billion users, including Google Search, Gmail, YouTube, Chrome, Google Maps, Google Play and Android. Apple surpassed 1 billion active users of its devices in 2016. Amazon last year stated it has 65 million Prime members worldwide — which is only a fraction of its user base.
Privacy regulations will shrink the data market
Research on exactly how much GDPR or the potential ePrivacy Regulation may shrink the volume of data advertisers can buy to target is scant, given the laws are new. Still, advertisers will need to get used to the idea that data will grow scarcer, especially third-party data. Germany is the first market in Europe to produce a report estimating how much the ePrivacy Regulation could affect publisher and marketer revenues. In the report, by VDZ, the Association of German Magazine Publishers, 67 percent of publishers said that more than 30 percent of their programmatic revenue would be lost, and 53 percent said 30 percent of any revenue generated by retargeting would be lost.
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