The Impact of Third-Party Data Changes on Advertisers – So Far

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In March 2018, Facebook announced a plan to eliminate third-party data from the platform by removing their Partner Categories program from the advertiser ecosystem. It caused a stir in the advertising industry, but the reality is that data usage has been on the decline since late 2017 – even before GDPR and this year’s controversies around privacy and data use. It’s a shift that’s been long coming, and the removal of Partner Categories was the final push brands needed to start focusing on data as a core strategy, not just an add-on feature.

The Immediate Change

Immediately following the removal of Partner Categories, we at Adaptly saw third-party data usage drop to nearly zero across advertiser campaigns, down from over 60% of campaigns for some advertisers. Over the past few months, that has started to rebound.

Third-Party Data Spend on Facebook

Usage has increased nearly 3x since the drop-off in September, and nearly 15% of all Facebook media is now purchased with third-party data. The initial slowdown was the result of advertisers working to understand the impact data had on their campaigns, the potential difference in cost and need to approach data as its own line item, and the wide variety of new data options available to them.

Facebook & Instagram Third-Party Data Spend
as a % of Total Media Spend, 2017-2018

There was also a change in mindset that needed to happen. Previously it was easy to add a third-party data set – household income for example – to campaign targeting without a thought as to how much it would cost or what the ROI of that data would be. Now that the data costs are no longer simply baked in to media investment, the value of that data is more independently brought into question. There’s also an opportunity cost of not pursuing data strategy, and an advantage to be gained by prioritizing data in your social marketing.

With Partner Categories, it was easy not to think about data use. Now the landscape has changed, and brands need to think about how to prioritize, who to partner with, and what it will take to get ahead of the competition by making data strategy a core pillar of their marketing plans.

The New Data Landscape

Advertisers can purchase data through some marketing partners (including Adaptly) or directly from data providers, such as Experian or Oracle Data Cloud. But so far, advertisers have been hesitant to partner directly with data providers. This is due in large part to the time and effort it takes to vet, form relationships, and execute contracts with the multiple data providers needed to optimize campaigns. At Adaptly we’re forming these relationships in-house, working directly with the data providers to access the best sources of data for our advertisers’ campaigns. These relationships are opening up a variety of new options for advertisers, such as advanced purchase and loyalty data from IRI and real estate data from CoreLogic.

How This Impacts Advertisers

Third-party data improves performance for many advertisers, but the needs are different from industry to industry. Automotive advertisers, for example, need DMV and lease data to understand intent – who has a car, how long have they had it, and who is potentially in-market. Those advertisers used third-party data before, and they are still using it now. Other industries, like retail and financial services, have historically relied on their own first-party consumer and pixel data for targeting on social media. While those options are still available, there’s new incentive for advertisers to gain a competitive advantage by exploring the full data partner landscape. That way they can invest in the perfect partner – not just the partner whose targeting categories were most closely available in the ad creation process. Financial services advertisers, for example, can make use of Windfall’s net worth data, while retail advertisers will benefit from enhanced credit card data from Visa and Mastercard.

The transparency of data costs is also a benefit to advertisers. In the short-term it adds another layer of complexity that teams need to manage, but in the long-run it will allow teams to see and measure the value of the data they’re purchasing. Facebook has for years cautioned advertisers against being too granular in their campaign targeting, citing a delivery system that is optimized to get ads in front of the right people, no matter the targeting parameters. The argument is that by keeping your audience broad, Facebook will be able to find new customers and audience segments that your niche targeting would have otherwise missed.

Advertisers can now be more mindful about their targeting strategies, testing broader audiences and making room for mass reach – not just creating hyper-personalized campaigns because of the simplicity that came with tacking on extra Partner Categories. In the right settings, both types of campaigns can be of value, and with the data costs now independent from Facebook, advertisers can more effectively measure when the data costs, and more personalized targeting capabilities, are worth the investment compared to native broad targeting.

Third-Party Data Continues to Change

None of these challenges are unique to Facebook. Across the industry there is a push for more accurate targeting, more transparent data, and more relevant advertising, all of which come from using reputable data sources at the right time on the right platform. This could require significant investment for brands, from forming data partnerships to onboarding data strategy resources. At Adaptly we’re aiming to take on those new responsibilities so our advertisers don’t have to. The results of this shift are still unfolding, and we’ll be sharing more information as advertisers fine-tune their data strategies in the months to come.

To learn more about Adaptly’s new data partnerships,
contact us at this link or email [email protected].