Data Is About To Be Priced Differently

Data pricing for audience augmentation and ad targeting is still stagnating where display inventory was more than a decade ago, when publishers could create a rate card using best guesses and competitive intelligence. Programmatic advertising emerged and inventory pricing evolved significantly. There was a period where good inventory was commoditized as part of a drive towardscale, and now we’re in a period where inventory is priced somewhat in line with its perceived value. 

I predict data is on a similar path.

No More Data Abuse

Throughout the inventory pricing roller coaster, the data itself was priced with a fixed CPM. While inventory has matured and programmatic bidding has proliferated, one fact holds true — only one ad can be placed per impression. 

On the other hand, hundreds of different brands can buy the same data and use it ad infinitum. Because of this ability for data to be used repeatedly, it has been misused and incorrectly valued. The lag of reporting and lack of control and insight over data use and pricing has led to some ridiculous situations.

Media buyers target using disparate data sets and don’t use any universal frequency cap. They amass data into target audience groups that are preposterously huge, much larger than the real population of soccer moms or sports fans that they are targeting. And when competitors use the same data to target the same audience, they gain absolutely zero competitive advantage.

By now, many media buyers have gotten a bit smarter about how they use data for targeting, efficiently breaking things apart into multiple attributes, evaluating data partners across multiple audiences and organizing them so that each one is its own tactic, with tens, if not hundreds, of rows or micro targets to test and optimize. But the price and value of data still exists in some realm outside of how it’s actually used and how frequently.   

A Change In Data Prices

Interestingly, the demise of third-party cookies has led marketers to take data more seriously. B2B marketers plan to increase their use of zero-party data by 30%, and first-party data by 26%. The increasing focus on their own data will bring the value of data in general into focus. Marketers already realize they aren’t going to be able to rely solely on their own data and are starting to scrutinize their data partners in new ways. 

There are a few changes coming to data that will create the opportunity for it to behave more like programmatic inventory, where it’s priced based on the market, with special deals and pricing on the side. As more brands accurately test and measure the performance of different data sets, they’ll be more confident about buying what works. Good data, from companies who take privacy and content seriously, will be in higher demand, and data providers can confidently change their prices based on the market response. 

What’s more, just like media buyers pay a premium to ensure that their competitors can’t advertise near them on a page, it’s likely marketers will also pay a premium to limit who else has access to data to ensure they have unique insights. Just like today’s programmatic guaranteed and PMP deals for inventory, it’s likely there will be similar deals for data — like getting “first dibs” on people who are shopping for a new car. 

A New Era Of Data Pricing

The changes in advertising influenced by the shift from third-party to first-party data open the door for a few different changes to data pricing, such as:

1. More bulk deals with agencies. Most holding companies have close relationships with data providers already. It’s possible that agencies continue with bulk deals to get data at a discount and then work with their clients to price the data in a way that works for them. This works best for big data sets that are used at scale across a lot of brands.
2. Dynamic bidding on data that’s more like today’s programmatic inventory market. The only difference is that until now, inventory was scarce and data was not. But there is the potential of adding scarcity to the market. If good data is used by too many companies, it’s possible that marketing performance goes down, creating a need for a mechanism to limit the number of companies that can buy it, thus increasing the price.
3. Cost of media model through programmatic channels. While it won’t work for all cases, applying pricing to data based on the cost of media could become more popular with advertisers who want to use audience targeting at scale in a way that’s affordable by capping the cost of data to the price of the media buy. 

The majority of marketers — 70% — said that consumer data is the lifeblood of their organization, and the move to identity and first-party data gives marketers more control, insight and confidence to fine tune the way they use data. Smart marketers will get ahead of the curve and start forging the right data partnerships early, lock in good prices and gain access to the data that delivers the best performance before the coming surge in demand for the good stuff.