Are you mis-valuing your first-party data? Context may be King but your traffic is Queen so give it its due respect.

In the current environment, with vast changes in technology and regulation, there is a powerful narrative that first-party data — often derived from context — will be more valuable simply because third-party data will be scarcer. The reality here is that the value of your data is determined by the impact on marketer acquisition costs — and your traffic may have much more to offer than context confers.

Consider this analogy. Goods meant for consumption become more valuable when they are scarce. When food is scarce, it costs more. When gas is scarce it gets expensive. Marketers don’t buy data for direct consumption, though. Marketers purchase data to increase their efficiency by reducing customer acquisition costs. So, the value of that data is determined by its ability to impact those costs.

For a marketer selling a luxury auto bought equally by male and female irrespective of creative, gender data might not be worth a sou. However, a history of past Audi purchases might be worth a mint. If the marketer’s data shows that she can meet the target acquisition cost of $350 for each in-dealership test drive by touching past Audi buyers at $18 CPM, she will buy those Audi purchaser impressions for up to $18. She can’t pay $20 CPM, because that will take her over her allowable acquisition cost. If a sudden dearth of third-party data means she has many fewer Audi buyers that she can find for $18, she’ll simply have to reduce total spend.

A flawed message: scale is the only challenge in a context-driven world

In a world of crumbling cookies and increasing challenges in linking identity and data, many in digital media technology have emphasized the value of a discipline that has been around for a long time: contextual targeting.

The narrative goes like this: “With third-party data becoming more scarce, contextually derived first-party data will become more valuable. The only problem you might have is scale. When data derived from a person’s behavior on other domains isn’t so readily available, you may not have sufficient traffic to meet a particular marketer’s needs. 

Some adtech providers suggest: “Hang on. We can solve this problem too. We will build a common taxonomy of attributes and interest that layers your data with that of every other publisher who delivers the same context.” If I want to reach people who like anime, I may get those 3M profiles by targeting an anime node in the common taxonomy. I get 1M from you, and 1M from each of your two competitors.

Wait a minute. A publisher’s first-party data is more scarce and more valuable. Yet I am supposed to dump it into a taxonomy node with all my competition, undifferentiated, where I have little pricing power, and let marketers pay a single rate? Like oil in a barrel or grain in a silo? Isn’t that the definition of commoditization?

And just because a publisher operates an anime-focused property, what if their traffic is 50% luxury auto-intenders who have bought Audis? How do they get paid for that in the anime node?

An empowering message: your asset is your traffic

With all the renewed focus in the past two years on making context your primary first-party data asset, these messages may seem pessimistic. Don’t despair. They should be empowering. Your traffic is your asset. Attract the best with compelling content, and you have something valuable. Sell it for full value.

About a decade ago, programmatic advertising went from zero to around 80% of all display advertising because it enabled bidding and increased publisher yield. Despite cries of “leakage” and unequal information, the programmatic system works well for publishers and advertisers.

Going back to those anime lovers: If a bidder knows that certain traffic has a high auto-purchase intent, the buyer can bid more. Maybe she’ll offer to pay those $18 CPMs for that anime traffic. Publishers should seek the highest value for their traffic based not only on what they know, but what the market knows.

Creating a traffic value proposition

How do you get the most value out of your traffic?

1. Do what context adherents have been saying: aggressively collect and characterize context data for your traffic with widely available collection tools. Its first party data, it has value, and more is better.
2. Enhance your knowledge of your traffic with third-party enrichment tools. While this approach is more strenuous with more regulation around privacy and transparency, it can be worth the lift. Cookieless identity tools support this process.
3. Get deeper insights from your authenticated traffic with the classic info-barter. Use these rich “seeds” to build modeled audiences that meet surgical needs for marketers.
4. Expose your traffic in programmatic environments where the market may know what it’s worth. Pay attention to yield and optimize. There’s leverage here.

If the new world in digital media, marketing, and regulation has you sitting by the wayside, or placing self-imposed limits that harm your value proposition, it’s time to reconsider. First-party data derived from context is valuable, but it won’t provide a comprehensive picture of your traffic. Bulk channel sales in a common taxonomy will only serve to commoditize your work. You know that Google, Apple, and Facebook who have nearly 100% authenticated traffic won’t be limiting themselves to context. If you’re a quality publisher with valuable traffic, why should you?