by Susan Kuchinskas

Data has been the driving force for evolution in the online advertising world for a number of years. Most likely, you already understand why: when you reach audiences with a targeted, relevant message, you increase the chances of them taking action. That’s why data is one of the most conversation points in digital ad sales, today. The challenge is that it’s also one of the toughest concepts to understand. Not every technology professional has a background or interest in statistics. And not every statistician has a background in data science or machine learning.

To help you give you a primer on data for ad tech, so you’re ready for sales conversations with almost any prospect, we’ve written a practical guide. Here are some of the most frequently asked questions that professionals in the industry have:

Where does advertising data come from?

These days, it can come from almost anywhere, online or offline. Here are some of the kinds of data marketers can use:

  • Demographic: The basics, including age, gender, place of residence and household income
  • Geographic: Where someone is at a particular time, derived from the location of a desktop computer, a laptop or other mobile device
  • Behavioral: Actions that a person has taken, including searching online, going into a physical store, clicking on an ad or purchasing something online or instore
  • Contextual: Data that provides information on the immediate context around a consumer’s actions. For example, if someone searches for a local business on a mobile phone, the search provider may be able to identify the time of day; physical location; and type of device used, all of which can help send the appropriate ad.

What do first-, second- and third-party data mean?

Many digital advertising campaigns pull together data from a variety of sources, on the fly, in close to real time, in order to identify consumers who are most likely to respond to an ad. The different data sources are usually classified in three ways:

First-party data data is data that is owned by the company doing the marketing. It’s generated within the context of a direct relationship with an individual. When someone visits the website and receives a cookie; when someone signs up for emails; when someone buys something in a physical store or online, the information generated is first-party data. It’s usually stored in a customer-relationship management (CRM) system or a data management platform (DMP).

Second-party data may be owned by the marketer but generated indirectly. For example, second-party data is generated as the result of a targeted campaign on an ad network. Another company’s first-party data also qualifies as second-party data. A good example is when a publisher allows a premium advertiser to make use of the publisher’s first-party data.

Third-party data is usually offered by data vendors. It may be gathered from a variety of sources and then aggregated. It’s often packaged into pre-defined audience groups, such as “affluent moms,” or “people interested in gadgets.”

What exactly is the value of first-, second- and, third-party data?

First-party data is valuable for a few reasons. For one, the data is owned by the same company that is looking to build insights. You have unique insight into your customers that others may not. It is often the foundation for building a comprehensive customer profile.

First-party data is also easier to manage for a few reasons:

  • You’ve vetted the quality and have transparency into the information you’re looking to surface.

  • It’s framed from the perspective of your business goals and sales process

  • Because marketers already own the rights to it, they can use it within their campaigns, at no cost. Second and third party data can be equally valuable, allowing marketers to see beyond the lens of their own company. Both types of data are essential to the creating a comprehensive customer picture.

The bottom line

That’s why, when helping your customers choose data sources, you need to focus on quality and accuracy. Make sure that you’re maintaining your internal databases, and your information quality is clear. A number of data sources may be necessary to run your campaigns effectively. One rule of thumb is to always line your data up with the story that you’re looking to tell. Does the information you’re analyzing help you move closer towards your business goals? That question is foundation of data-driven targeting.
You’ll have more productive sales conversations by understanding the role of data.