There is more data available on consumer preferences, behaviors and interests than ever before, so marketers must be more discerning about which data providers they use and how they leverage purchased data to drive sales.
Throughout the process of vetting third-party consumer data, it is important to remember that the purpose of advertising is to build loyalty between a brand and its consumers, not just to increase impressions. Brands must ensure their third-party data is collected with consumer knowledge and consent, and in a way that delivers appropriate value to the consumer.
At a time when public sensitivity to data usage and privacy is high, this approach also enables brands to stay agnostic to the debates over privacy while delivering more relevant, personalized and enjoyable ad experiences to consumers. This is particularly relevant now that Facebook modified its built-in digital targeting capability to require advertisers to verify that they have the appropriate rights to access and use third-party data to optimize campaigns on the platform.
To ensure your brand is responsibly leveraging third-party data to build loyalty and optimize digital advertising, consider the following best practices:
(Full disclosure: IRI offers big data and analytics integrations and insights.)
1. Ask the right questions.
It’s important to verify that your data partners own or know the source of their data assets and that the data is collected transparently. Brands that know more about their data can think more critically about its use and better realize its value.
The following key questions can help ensure purchased data helps meet your brand’s objectives:
• What is the data source? Are the sources representative of all outlets, geographies, formats, channels, etc?
• How many unique verified purchasing households are included in the data set, and what percentage of the audience is deterministic? The number of deterministic, or verified, households included in consumer shopping data drives the quality of the data set. The more, the better. Fewer verified households mean more of the data is modeled, which means it is projected and less accurate.
• How often is this data refreshed? Recency can be the difference between reaching someone at the precise point in their purchase cycle when they’re most likely to purchase and missing the critical window of opportunity.
One way to alleviate the above concerns is to ask data partners for an assurance statement that helps brands understand exactly where their data comes from and how consumers consented to share their information.
2. Use purchase-based, ‘known’ data for the most effective campaigns.
Most consumer data sets sold to marketers are modeled data, meaning they include a small amount of known data that is extrapolated to apply to a larger audience. However, the “known” data is often the result of self-reported surveys that may be inaccurate.
My company published the “IRI EquityScore Data Research Report,” which surveyed 811 members of our national consumer panel on their recent purchases and compared their responses with their scanned purchase behavior. Our results showed that consumers remember what they purchase with only 40% accuracy. Therefore, survey answers are far less accurate than purchase data, such as data collected passively via a loyalty card. While modeled data is useful in many contexts, leveraging large verified data maximizes the ability to reach the consumers most likely to purchase your product.
To drive the most efficient, effective and ethical digital campaigns, brands should target consumers based on things they know to be true about them, using deterministic data the marketer has the right to use.
Known consumer purchase data is collected transparently and passively from customers who sign up for loyalty programs. This allows customers to determine if the value of a discount is worth sharing their data, and only when they present their loyalty card is this data used to target advertising.
This value exchange provides unparalleled accuracy in understanding consumers’ purchases and how their purchase behavior changes over time.
Combining large quantities of deterministic data with additional high-quality modeled consumers creates an audience that is both accurate and scaled, able to target known buyers and highest-value prospects.
Research from IRI’s benchmark database, a controlled study that analyzes our advertising partners’ exposure data to consumer purchase data, shows that using known purchase data to activate a purchase-based targeted campaign boosts return on advertising spend by up to 20%, and increases sales lift three to four times more than targeting methodologies that use demographic data. Importantly, these superior third-party data sets are still actionable under Facebook’s new policies, as long as the data was sourced transparently.
3. Let ‘likes’ inform your creative, not your core audience.
Many advertisers build digital audiences for their campaigns using engaged populations that “like” relevant posts or pages. But using this data, known as “inferred information,” to choose a target digital audience can be a major misstep. According to author Sherry Turkle, people are aspirational on their social media accounts — they curate an online presence that reflects how they wish they behaved, rather than their true preferences.
As such, buying audiences built on known, purchase-based data ensures your advertising will reach the consumers most likely to buy your product, rather than those most likely to post about it. That said, inferred information can be helpful in informing your ad creative. Using likes, trending topics and viral videos to inform advertising that doubles as engaging, timely content can help to build your brand equity on a relevant platform with exceptional scale.
Marketers leveraging third-party data to optimize digital campaigns can responsibly build loyalty and drive sales by asking the right questions, using the best quality data in the ways it is most valuable and ensuring that consumers are comfortable with the way their data is collected and used.
With its recent policy change, Facebook acknowledged the importance of using quality data for digital targeting. Marketers should follow suit and institutionalize these third-party data best practices across their marketing programs to build trust with their consumers and position their campaigns for success.
