According to IAB’s State of Data 2018 report, for the first time in history marketers are investing more in digital data assets than traditional “terrestrial” data. Digital assets being those typically taken from consumers’ anonymous website behavior, with traditional being “direct mail and other offline communications.”
The research for the report was gathered by Winterberry Group and is based on several in-depth interviews with senior-level marketers in addition to aggregation of publicly available financial information.
In 2018, third-party digital data will account for $3.67 billion—up 36.9 percent from last year—compared to the $3.62 billion invested in terrestrial/PII assets. This expected increase is due to a rise in programmatic advertising. It also comes despite increased scrutiny on the use of consumer data.
“This year, as we build upon that first effort to provide the first historical view of domestic data expenditures and the dynamics undergirding them, we have another conclusion to make: data expenditures aren’t just big- they’re growing at a more rapid pace than the media channels with which they’re typically associated,” said Jonathan Margulies, managing director of Winterberry Group.
The report also found U.S. companies are accelerating their spending on third-party, audience data for advertising and marketing efforts.
This year, companies are expected to spend about $19.2 billion on U.S. audience data acquisition ($12 billion) and data activation solutions ($6.1 billion)—a 17.5 percent increase from 2017.
The growing investment in third-party audience data comes from the challenge marketers face establishing an understanding of who their individual customers and prospects are as they go over various touchpoints such as transactional, digital, traditional and promotional.
“Programmatic advertising has taken a central role in the marketing landscape and this study shows how increasingly vital third-party data has become as a result,” said Orchid Richardson, vice president and managing director, IAB.
“Third-party data provides insights—from geolocation to interests and more—that can help brands deliver highly personalized messages to consumers and expand audience.”
Investing in solutions to adequately combine the functionality of numerous established tools (CRM databases and DMPs) with a long-term view of creating a central view of prospect and customer audiences is one of the driving points in audience data activation solutions.
New regulations further impacted the growth within data management, processing and integration.
This year, GDPR changed the dynamic of third-party audience data forcing providers, who didn’t track the origin or supply chain of their audience, to exit or refine their approach to achieve agreement.
The passage of the California Consumer Privacy Act (CCPA), to take effect in 2020, will most likely have a similar impact as GDPR—marketers and data providers will look to anticipate any effects.
In 2019, experts believe the industry will get closer to solving attribution, get new transparency standards and there will be increased spending on data management and governance.