Pass the Datamongers
IPA (Institute of Practitioners in Advertising)
The people behind the practitioners who make UK advertising what it is today
IPA Excellence Diploma graduate and Digital Hub Lead at Unilever, Waqar Riaz explores how brands and businesses can turn data into their fuel for growth.
Much has been said on the subject of data and how brands and businesses can use it to their advantage. It’s been over a decade that we are being presented with the silver bullet of data and how we can win the ‘digital world’ by championing the art of data driven brand building. We have heard that collecting and using data can help us get closer to the consumers in the real-world - it can help unlock insights, deliver personalised communications, improve conversion rates, improve ARPU, reduce wastage, improve effectiveness, deliver segmented content, connect the dots between the ‘online world’ & the ‘offline world’ and help us ‘win each step of the consumer journey’. On the back of this ‘Golden Ticket to Brand Paradise’, we have been sold billions of dollars’ worth of digital ad space, data management platforms, marketing technology stacks, digital operations services and so on. Between 2009 to 2020, Facebook alone has sold $321.2 billion worth of ad space to brands and businesses.
While all the theory of data driven brand building makes perfect sense, though a lot of data that fuels online ad spaces is garbage. Once the leadership is convinced to invest in ‘data’ and gives their go-ahead, its operationalisation gets caught between the ‘walled gardens’, tech disintegrations, channel attribution, investment prioritization and so on. Then comes the year end and we are presented with Machine Learning, Artificial Intelligence, Blockchain smart future fit promises and how things can get better from the ‘New Year’s Day’ onwards - and there goes another contract for us to put our hopes in.
A study by Nico Neumann, Catherine E. Tucker, and Timothy Whitfield found the accuracy of data driven targeting worse than random guessing. In one experiment, they used six different world leading data driven advertising platforms to reach Australian men between the ages of 25 and 54. Their data driven experiment delivered an accuracy of 24.4% for the two attributes, while the natural distribution of the two attributes is 26.5%. I believe enough is enough, it’s about time instead of listening to the ‘Datamongers’, we find the way ourselves to understand and do the right thing - to unlock the ever-missing value of data for our brands and businesses.
However, before we move forward let's try to understand if collecting and using consumer data holds a real value for brands and businesses. And by real value I mean the value that matters most to the CEOs, CFOs and shareholders - the bottom-line growth, the profitability. Instead of getting lost in the data value chain, let’s learn from the businesses who presented us with the ‘data’ silver bullet. Let’s analyse if collecting and using data is fueling business growth for them. For the purposes of this analysis, let’s look at Google, Amazon, Facebook, and LinkedIn - the global corporations who have promised big on data. Collectively these businesses hold 8.562 billion active consumer data points (naturally with overlapping users amongst the walled gardens) - the chart below details it by individual business.
Chart 1: Active Users Worldwide in Million
From the 8.562 billion consumer data points held by Google, Amazon, Facebook, and LinkedIn, collectively, they earn $256.6 billion annually by selling ‘targeted, segmented, personalised’ data-driven spaces on their platforms to brands and businesses (Chart 2). That’s a lot of money for names, email addresses, telephone numbers, location and interests - and too good to let go - no wonder why they are always so keen to keep us engaged, entertained and hooked. The irony is that a lot of consumers don’t realise the true value of their data - I asked a non-marketing friend of mine of ‘what she would consider to be the value of her Google account?’, she replied, ‘why would my account be of any value to Google - in fact it’s Google that gives me value’. I insisted her to guess a dollar number, she replied, ‘zero’. Her answer left me baffled and made me really think about the value model created by digital businesses built on monetizing data.
Chart 2: Annual Worldwide Marketing Services Revenue in USD Billion (2020)
The above analysis of Google, Amazon, Facebook and LinkedIn demonstrates that holding and using ‘data’, has real commercial value for the businesses who know how to use it. Let’s understand the model applied by Google, Amazon, Facebook and LinkedIn and see how we may benefit from it to positively impact our bottom-line.
1. Build Value that Fuels Data.
In 2003, when Harvard only had a paper version of ‘face book’ (a Harvard student directory featuring photos and personal information of students), Zuckerberg told The Harvard Crimson, "Everyone's been talking a lot about a universal face book within Harvard. ... I think it's kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week." He went on to doing exactly that and in January 2004 he launched a website called “TheFacebook”, now known as “Facebook”. I am pretty sure when Zuckerberg was building his idea, he wasn’t planning on selling its user database for $84.2 billion in annual advertising revenue. Zuckerberg’s focus was purely on bringing a real value to people, powered by digital technologies – the data just came out from Facebook as a byproduct. Imagine instead of building ‘TheFacebook”, Zuckerberg ran always-on quizzes on The Harvard Crimson for a chance to win some plane tickets, mobile phones or a year worth of free subscription OR asking The Harvard Crimson readers to visit his online directory for website coding services. Today, he may would have acquired a decent % of Harvard students data, but would certainly not be making $84.2 billion from it. Probably he would just be sitting on the data thinking what to do with it. Unfortunately, this is exactly where we are today! We are told the door to marketing success is through data and then blindfolded into acquiring it. I strongly believe this whole approach sold to brands and businesses by the ‘Datamongers’ is wrong. Yes, data can be of immense monetary value to a business, but only if its source is based on real and consistent value in the lives of consumers. Instead of buying into the ‘data dream’, it’s time we focus on delivering a real value to the consumers – data will follow the path naturally. It’s time we become bold and beautiful than safe and cunning. Answering to the below questions, may help a business in offering an unbiased value proposition to people of the digital world.
Looking at Google, Amazon, Facebook and LinkedIn, it’s obvious that none of them have designed their services around data, in fact it’s data that is designed around their services. Google is how the world searches for information, uses technology, find locations, send Emails etc, Facebook is where the world socialises, Amazon is where the world buys stuff, and LinkedIn is where the world grows professionally. None of these corporations have a service solely designed for collecting and marketing data – yet they are the largest owners of consumer data in the world. While generating data on the back of an unmet consumer need will reap monetary gains, sourcing it from ‘Datamongers’ would only increase the ever-growing data garbage. The below figure illustrates data value model.
2. Own it Organically.
Have you ever come across an ad to sign-up to Facebook to socialise, Google Account to master the web information, LinkedIn to show your professional skills to the world, or Amazon to buy everything in one place? Not sure about you – but definitely I haven’t. The reason is simple – these corporations invest their dollars in creating value for the consumers than broadcasting data baits to them. They ensure the value they offer, and build is unique, dependable and leaves no choice for the consumer to go elsewhere. This is tough and requires constant innovation, rapid change and relentless disruption. In 2020, Google, Amazon and Facebook spent USD $88.65 Billion on Research & Development alone. By contrast, this is more than the combined R&D expenditure by the United Kingdom and Italy in 2020. For brands and businesses, data may be the door to success, but for consumers in the real-world, ‘their data is the door to a value that fulfils an unmet need – constantly and unconditionally’. If the value offered by our brands and businesses is not good enough to attract consumers organically, then we are simply being ignorant about how engagements take place in the digital world. Back in 2011, I wrote a piece on WARC explaining the future of media in the digital world “Earned is the new bought’ – I feel it’s still very relevant to the point in hand. Instead of opening our ad wallets to ‘Datamongers’, it’s about time we invest those dollars in creating a unique universal value for consumers. A value that invites consumers without any paid hooks – a value good enough to keep them engaged daily for the years and decades to come. Naturally on the back of consumers using our value, we will gain more understanding about their behaviours, their interactions and the experiences they prefer “DATA” – which can then be fuelled into growing the bottom line of our business directly and indirectly.
3. Learn, Discard, Evolve.
Two Hundred and Thirty One – that’s the number of businesses Google has sentenced to death between 2002 and 2021. These businesses were built to support its core value offerings namely; Search, Android, Maps, Gmail, GVoice, YouTube, GSuite, and Cloud. Similarly, over the years, Amazon has closed over 24 businesses costing it billions of dollars in mistakes – all these businesses were built around Amazon core value offering of selling and buying things over the Internet. Looking at these numbers, it becomes evident where Google and Amazon are spending their $27.5 billion and $42.7 billion annual R&D expenditure – in constantly improving the value of their core value offering to ensure they never become the second best for consumers. And more importantly not being shy from discarding what’s not worth the consumer attention – regardless of what it may cost. They know that losing consumer attention will mean losing consumers – and losing consumers will mean losing consumer data, which will mean losing their ever growing multi-billion-dollar data-driven digital empires.
The organisations of the digital world have mastered the art of ‘value enhancement’ at the speed of light – something old organisations still struggle with. The present state of old organisations resonates so well with what Zuckerberg said back in 2003 when pitching TheFacebook to The Harvard Crimson, “…I think it's kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week." Old organisations are accustomed to bureaucracy, long-tail processes, complexities built around job survival and so on – where playing safe is preferred over playing for the consumer – where aligning everyone to ensure cross boardroom happiness is preferred over making the consumer happy. Without an experiment mindset one can’t succeed in the data-driven economy of the digital world. It requires one to constantly hypothesize, test, learn and evolve to keep the audience engaged – and on the way learn to quickly let go off what’s not appreciated by them.
Once a business has successfully identified an unmet digital value proposition, and built an ecosystem that organically attracts users, if it just stops there then in a few years’ time it will turn itself into another MySpace, Yahoo Search, OrKut, TheGlobe.com (pre-LinkedIn), Shareyourworld.com (pre-YouTube) and so on. It’s of paramount importance to learn from platform consumer engagements, identify what might engage them further, bring it to life, continue if it boosts engagement, discard it if it doesn’t, and move on to the next value enhancement experiment. The below figure illustrates the point further.
4. Turn Consumer Database into Consumer Data Marketplace.
The foundation of Internet is built around universal exchange of information ‘data’. In 1989, when inventing the World Wide Web, Sir Tim Berners Lee wrote in his Paper, ‘Information Management: A Proposal’, “…The result should be sufficiently attractive to use that the information contained would grow past a critical threshold, so that the usefulness the scheme would in turn encourage its increased use. The passing of this threshold accelerated by allowing large existing databases to be linked together and with new ones.” While any business holding large sets of consumer data related to its platform, can certainly benefit from improving the performance and value of its platform, the grand monetization of data only becomes possible when it’s made accessible to others to benefit from it.
Traditional Internet based retailers such as Amazon and Walmart, which used to keep consumer data closed within their walls are realizing this now – they are building data exchanges and demand side platforms to allow other businesses to benefit from the consumer data they hold. The entire multi-billion-dollar empires of Facebook, Google and LinkedIn are built around offering their database to other brands and businesses. On one hand these businesses relentlessly use consumer data to enhance their value offering and competitiveness, on the other they trade large sets of consumer data in an open “marketplace environment”. In 2020, more than 80% of Google’s annual revenue came from trading data in exchange of ad dollars – and for Facebook consumer data trading resulted in 97.9% of its annual revenue in 2020.
After a business has cracked its value proposition to answer an unmet universal need, road-tested it for organic growth, applied mechanics to constantly enhance its offering, it then needs to look at ways in which it can turn consumer data into an open marketplace for brands and businesses – only doing this would help it grab its true share of the ever growing ‘data economy’. The figure below illustrates this point further.
5. Go hard or Go Home.
I recently asked some of my non-marketing friends on how they respond to advertising on Instagram and Facebook, the reply at large was, “they ignore it”. When I asked them why, one responded, ‘I don’t like being told – if I need something I will find it myself”. I understand the sample size of my survey is relatively small and shouldn’t be taken as a verdict on online advertising, but I hope a lot of us can resonate with its findings. I believe, today’s biggest dilemma with data-driven marketing is its struggle with fitting the “broadcast” model of “sell to eyeballs” to a world that doesn’t like to be broadcasted. Using billions of data points to broadcast messages to consumers (be it random, targeted or personalised – hardcoded or powered by AI) was born out of immense investor pressure in the early days of Digital Billionaires Club. While businesses such as Facebook, Amazon, Google and LinkedIn made significant progress in creating digital values to fuel data and in return made billions for themselves – they have made very little progress to turn data to fuel dollars for brands and businesses. Therefore, we have a need to work towards a digital ecosystem, where platform owners, consumers, brands and businesses can equally enjoy the benefits of ‘data economy’. In building the next generation of data driven digital businesses, from the day one, our ‘data marketplace’ should be as hard on passing a direct monetary benefit to consumers, brands and businesses, as ‘Datamongers’ tend to for their own books alone. Doing this will be challenging and require us to innovate beyond the decades old ‘data’ driven digital revenue models. Building on the previous illustrations, the figure below summarises the proposed concept.
To Conclude:
Today, it’s possible for anyone with enough technical knowhow and decent funding to create a software similar to Google, Facebook, Amazon or LinkedIn. Though what would hold them back from turning their software into a multi-billion-dollar business are the 8.562 billion active consumer data points. Different to the pre-digital world, where one could duplicate a successful business model from the USA and successfully implement it in China, duplication of ideas is simply not the key to success in the digital world. Digital has removed the reach barrier – someone sitting in Beijing (TikTok) can dominate the world as much as someone sitting in the Silicon Valley (Instagram).
Consumer data always has and always will hold bottom-line value for businesses. Google, Amazon, Facebook and LinkedIn alone are making $256.6 billion annually in return of trading consumer data. It’s true they are yet to deliver on the promise of smart intelligence fuelled marketing that works as a fuel for growth for businesses paying the ad dollars – but instead of thinking of it as ‘data not working’, let’s think of it as a bug invented by the ‘Datamongers’. Let’s roll up our sleeves to fix this bug. John Perry Barlow, once said: “A good way to invent the future is to predict it”. Let’s work towards redefining the future of data. Let’s stop the pursuit of data and instead focus on creating unique digital value propositions which hold bottom-line value for platforms, consumers, brands and businesses – the higher the utilisation of the unique digital value the more consumer data it will pump out.
Over the past decade, there has been very little innovation in the ‘digital data monetisation model’. We have come to terms with data being the property of walled-garden protected ‘digital advertising broadcasters’. There is a need to bring ‘data monetisation innovation’ across many verticals of the web including Commerce, Social, Information Management and so on. Tim Berners Lee is not too hopeful to see much innovation on the Internet for the next 20 years – the father of the Web believes the data control enjoyed by few dominant digital players would be the biggest obstacle in large scale data innovation. Let’s surprise him – at least we owe him this. I believe, the global advertisers have a responsibility and role to play in redefining data fuelled digital economy – after all, it’s them who are losing billions in the ever growing ‘data scam’. They have an opportunity to create new unique value propositions to give birth to new data marketplaces – ones that deliver monetary value to value owners, wider brands and businesses, and consumers.
Doing this will be no easy task – the ‘data power’ held by few dominant digital gatekeepers means they are able to control ideas and opinions. They purchase start-up challengers, hire the industry’s top talent and buy up new innovations. Let’s challenge them this time for the greater good of all. Let’s take this moment to challenge ourselves to build universal data-driven digital businesses which can deliver cross border value, able to attract consumers organically, fast at learning, discarding and enhancing value, open to inviting others to benefit from the data they hold – and most importantly able to think beyond themselves when yielding the monetary value of ‘data economy’. The journey may not be very ‘friendly’ – but I am confident it will bring way more joy and satisfaction than contributing to the ever-growing bucket of data garbage. Let’s work together to bring the real joy of data-driven growth to brands, businesses, consumers and the industries at large.
About the author:
Waqar is a long serving business strategist. His passion is in enabling digital technologies, data and human intelligence to help businesses, brands and people increase efficiencies and effectiveness. Currently, he is leading the Digital Hub for Unilever - bringing together data, technology, content, media, user experience and Ecommerce capabilities to deliver holistic and personalised experiences across the consumer journey.
Prior to joining Unilever, he built and spearheaded the Global Digital Effectiveness and European Data Driven Marketing practices for Samsung Electronics through its in-house marketing arm Cheil.
Waqar completed his Masters in Brand Planning from the University of Buckinghamshire, UK in 2009. In 2014, he graduated from the Institute of Practitioners in Advertising, UK with Excellence Diploma (MBA of brands) - the highest form of qualification by the IPA.
The opinions expressed here are those of the author and were submitted in accordance with the IPA terms and conditions regarding the uploading and contribution of content to the IPA newsletters, IPA website, or other IPA media, and should not be interpreted as representing the opinion of the IPA.