Twitter is following Facebook’s playbook as it moves away from providers of third-party consumer data.
Currently, the social media firm offers access to data from outside companies, helping advertisers better target audiences on its platform. As of early 2020, however, it will remove such sources from its ad-buying system, forcing advertisers to find their own external data sources.
This is the latest instance of a tech company distancing itself from third-party data providers amid increasing concerns regarding the security of customer data.
Twitter attributes its decision to a desire to focus on operational priorities including new products and R&D, insisting no connection to growing tensions over data safety and protection.
But it’s hard not to connect the dots to Twitter’s announcementOpens a new window last week that over the past year it had accidentally shared user data without permission.
It’s also hard not to notice the similarities between this situation and Facebook’s last year when it pulled back from providing advertisers access to third-party data — a move made not long after the Cambridge Analytica scandalOpens a new window , with its significant negative impact.
Clearly, tech firms in the digital advertising space have been spooked.
The murky nature of the segment has become problematic. Questions abound over the accuracy of the information provided by these sources, while abuse of third-party data has become common, with many marketers routinely violating consumers’ privacy.
I believe we can expect a sector-wide aversion to these sources to spread as major ad platforms decide the risk isn’t worth the reward.
Third-party data: a poor man’s first-party data
Consumer data has become all-important in digital marketingOpens a new window . It can be leveraged to provide actionable, high-value insights on consumer behavior and preferences that lead to ROI.
Unfortunately, collecting that data for yourself (known as first-party data) isn’t easy, and many marketers instead turn to the quick-and-easy solution of third-party data.
This data, though, is to first-party data as a fast food burger is to its gourmet counterpart: It’s easy to get your hands on. And although the taste and calories may be emptier, it can satisfy some of your hunger.
That data is usually aggregated and owned by an organization (for example, a government, charity or data company) that sells access to its proprietary information. The problem is that this data is general consumer data and may not be particularly relevant to a company’s specific customers.
Moreover, it’s becoming well understood that the methods used to collect data by many third-party providers can sometimes border on the illegal, while the veracity of the data itself is hardly certain.
One major data management platform, Lotame, recently had to dump 400 million profilesOpens a new window from its data sets after discovering it had been spoofed by bots and they didn’t represent real people.
No wonder, then, that a 2018 Digiday reportOpens a new window found that 82% of advertising executives consider third-party data unreliable, while 30% agreed that unreliable third-party data is the key setback to incorporating data in digital campaigns.
To provide more perspective on the information’s degree of inaccuracy, a study by ChoiceStreamOpens a new window revealed that two third-party data providers will disagree even on the gender of an individual one-third of the time.
Why you should care
Sadly, we can’t expect third-party data to fade soon.
For many advertisers, the game is scale. That’s what they look for from data vendors and they’re often willing to accept data inaccuracy in exchange for reach.
Part of that makes sense. “If you can get 300,000 people in a group with 95% confidence that they belong there, or 30 million people in a group with 60% confidence, well, it might not be such a hard decision to relax your model a bit, especially when no one is set up to audit you,†says Matt Rosenberg, ex-CMO of ChoiceStream.
Thing is, the landscape’s changing. Data privacy rules such as Europe’s General Data Protection Regulation and the California Consumer Privacy Act are putting pressure on companies to get consumer consent before collecting data to serve them ads.
As Kabir Sahani writes for AdWeek, while “the European Union is ahead of the curve with privacy restrictions…with controversies like the Cambridge Analytica fiasco, the US might soon see stricter laws surrounding people data as well. This is bad news for third-party data, which circumvents direct opt-in.â€
Meanwhile, consumers have become more informed regarding their data and how it’s used, spotlighting the ethical issues. As such, marketers who run afoul using third-party data could face severe public backlash.
As the world’s largest advertising platforms increasingly turn away from third-party data sources, marketers have an opportunity to take responsibility for their own data strategy — and they should.