The Power Of Information In Advertising

There have been a flurry of recent articles stemming from a new study by Digital Advertising Alliance (DAA) about how ad value spikes when data is used to boost relevance. Ensuing articles have gushed that “advertisers pay three times more for cookie-based ads” and “advertisers will pay a substantially higher premium for interest-based ads.”

Part of this is clearly not news: if you use data to refine your ad targeting, you’ll get better results. I learned this in business school in 1986, and I’m overwhelmingly confident that it was known well before then. Adweek took the right angle with this study — rather than focusing on the truism that data helps marketers, it focuses on the role of the cookie and the role that advertising and paid content will likely play in the future.

At the moment, there’s a stalemate between government, consumer advocates, large companies and industry lobbying groups over the use of cookies in digital advertising. Most consumers think of their privacy rights – the snooping that Snowden revealed — and cookies in the same breath.

The Spurious War Against Cookies

However, as industry groups like the Interactive Advertising Bureau (IAB), DAA and advertisers have proven, there is no correlation between cookies and invasions of privacy. That said, the sometimes negative discussion surrounding cookies has led companies like Apple to block them from “third parties,” and the industry as a whole seems to be moving away from them and instead toward other ways of identifying the people behind devices, browsers and apps.

In other words, nothing has changed except advertising technology, and the refinement of audience targeting is going to continue more or less forever. That horse has left the barn, and like it or not, ads will become more and more relevant to you.

Raising The Barrier To Entry

Government, privacy advocates and others will continue to try to limit advertisers’ ability to target consumers. Yet, the most likely thing to happen is that regulators may make it harder for small companies to compete. They will never stop Facebook or Google, let alone other firms like Experian and Nielsen, from gathering data and enabling advertisers to use it. All that regulations will achieve is the raising of barriers to entry.

The DAA study also explains that publishers large and small could face significant revenue decline without the financial premium interest-based ads deliver, and thus free content might diminish and go behind a pay wall. Sure, many publications sell ads to advertisers based on who reads its publication (content or context marketing), and so it stands to reason that “free content might disappear” because the amount of money that can be made from content targeting is diminishing as it’s replaced by audience targeting.

But free content won’t disappear. Will we have the ability to pay for content? Sure, it will just be up to the consumer. For example, I can watch The Daily Show online with ads, or I can buy it on iTunes for $1.99 without ads. I like Adweek enough to pay for it, whereas there are other publications I don’t value enough to pay for. This is similar to how most consumers will continue to use Facebook and Twitter, but many might stop if there was a charge for it. Apps that cost money are another prime example, and the same is true for many other tools and services we all use throughout our day.

Responsible Data Collectors Will Continue To Be Vital To Advertising

The most notable takeaway from the DAA’s study is that audience information is extremely valuable, and as long as consumers continue to engage, sharable data will exist. Today, and even looking way ahead into the future, responsible data collection plays a vital role in the economics of all advertising, a multi-billion dollar industry. Interest-based advertising, despite a sizable demand, is just one piece of the pie. The fact is that the world will evolve with or without cookies and with or without “free” content.

If I had one wish, it would be that regulators focus on desired outcomes instead of technologies; it appears that everyone has accepted that you can deliver relevant ads as long as you don’t use “PII” (Personally Identifiable Information — names, e-mail addresses, etc.).

Today’s focus should be on implementing this wealth of information to power relevant brand messages rather than spending countless hours discussing whether or not we should block cookies, use device IDs, or use signals that are broadcasted by some browsers but not by others (such as “Do Not Track”).

So, “breaking” news: data helps ad campaigns, and we’re only going to get better at it from here.