Digital data has not only gotten "big," as we now put it. Data has gotten fast, unstructured, and overwhelming. According to IBM, 90% of the data in the world has been produced in just the past 2 years. Feeds from social media, offline transactions, user video and image posts, and more all converge into massive dashboards that give marketers and now publishers increasingly real-time, unmediated, and holistic views of the consumer. The big impact of Big Data is only beginning to be felt among content providers, but many in the industry see it as both a threat to the traditional ownership media companies had over audiences and an opportunity to reinvent content as data-driven products and services and to give a struggling media industry new business models.
Data is starting to perform some of the tasks media traditionally has achieved. "Data is the new currency for connecting people and ideas and products in the digital age," says Gordon McLeod, former president of The Wall Street Journal Digital Network. As CEO of data management platform at krux digital, Inc., McLeod now helps publishers manage and monetize content. Creativity may still drive great content, he contends, but "Data is the new media in terms of science, in terms of discovering audience and connecting likes and interests with marketers."
Selling People, Not Pages
In the race to acquire and leverage audience data, marketers have beat media to the punch with a new economy of data-driven exchanges and demand-side platforms that Forrester Research, Inc. projects will account for 30% of display advertising by 2017. "Premium display has slowed down considerably," says McLeod. "Some of that is driven by programmatic buying." Massive mines of user data help marketers find who they want to target online in easier and cheaper ways and at greater scale than they can in the pricey environments major media built. Many publishers, however, complain that this digital signal processing data was first harvested from their sites by the ad exchanges, social sharing, and analytics tools that provide services to content providers but also gather information on the media companies' users. krux digital reports that user trackers on top media sites grew 400% in 2012. Privacy services company Evidon, Inc. finds that Google, through its Analytics; social and ad products; and Facebook, via its share button and Connect log-in tools; are far and away the most common third parties culling data from publishers.
"That leads to deflationary pricing," warns Pivotal Research, Inc.'s analyst Brian Wieser. Marketers now know more about the audience than some media companies and can buy those people more cheaply whenever their cookies pop up elsewhere. "The industry is not growing, as most types of advertising generally choose to buy audiences rather than the context in which those audiences appear," he says. Wieser argues that the best defense is for media to dominate a given vertical as does a WSJ or FT.com and "be the ‘must-buy' property in an advertiser's consideration set."
Fighting the Race to the Bottom
Publishers are playing catch-up with marketers in the data arms race on multiple fronts. Companies such as tech publisher IDG's TechNetwork, NBCUniversal's Audience Platform, and The Wall Street Journal Digital Network's AUDEX products play the ad exchange game themselves with so-called "private exchanges" that put premium publisher inventory into the new real-time bidding exchanges with more favorable pricing and sales restrictions.
Bryan Burdick, COO and co-founder of Bizo, Inc., an ad network that works exclusively with B2B media such as UBM, Forbes, and Cygnus Business Media, agrees that now "[i]n a lot of cases [advertisers] understand better than the publisher the value of a particular eyeball or impression." Bizo turns the tables by overlaying its 110 million user cookie data on top of a publisher's own inventory for 30% to 40% CPM increases with better targeting, he claims. Burdick says publishers have to stop selling generic segments like "CIOs" and mine their own data more precisely to deliver tighter segments at a higher rate.
But it is data that also proves the continued value of premium environments. In Bizo's own tests of running B2B advertising on nonbusiness sports sites, for instance, "[W]e found it did not perform at all," says Burdick. "Context matters." He admits that B2B sites may have trouble maintaining $100 CPMs in the face of downward pressure from data-drenched programmatic buying. "But it doesn't have to be a race to the bottom."
McLeod agrees on the first line of defense in the data arms race. "You bring this audience together; it is your first party data that can be more valuable to you," he says to clients, which include FT.com, The Wall Street Journal Digital Network, and Reuters. And publishers need to use the data to become media buyers too. He sees publishers increasingly referring to their own userbase for insights that find new customers or retarget lost ones. Online advertising, supercharged by first-party data, can drive users to paid newspaper, magazine, or music subscriptions.