Krux Report: Data Collection Quadruples Since 2011, Third-Party Data Collection Spikes

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ADOTAS – With RTB being regarded as increasingly viable and desirable for buying media, it’s sneaking its way into just about any industry conference or deep discussion about where digital advertising is going. But a new report from consumer data solutions provider Krux underlines one striking side effect: The number of data collection events on publisher sites – specified in the report as events “when a cookie is set, referenced or modified on a user’s browser” – has skyrocketed, and increasingly, these events are happening beyond the publisher’s control. Krux notes the average number of data collection events per page has increased 400 percent – from 10 events to 50 – since 2011, and that 54 percent of that data collection was performed by companies that had been “ushered” to the page by third parties (up from 30 percent in 2011). The number of data collectors observed spiked, too, topping 300 in 2012, compared to 167 in 2011. And while there are several factors that could be at work, the report credited these changes to the rise of audience-based media buying and RTB, with “the majority” of third-party collectors being “venture-backed startups.”

In an email exchange, Krux president Gordon McLeod clarified what the report meant by parties “ushering” others to a page. “The way I like to think about it is as the data analog to the ‘daisy chaining’ of media impressions that we all know so well from the ad network world,” he said. “At its simplest, it’s when a person with access to a page, via an ad call or a tag, brings someone else to collect data behind them. It could be simple, like a measurement company riding along with campaign creative. In other cases, it really is more like granting ‘back door’ access to a third-party with no direct affiliation to the website owner – outside that site owner’s line of sight and beyond their control.”

Both the report and McLeod himself pointed out that not all the data collection observed was explicitly bad. “Many types of collection and their collectors are incredibly important to the publisher’s business and, ultimately, benign,” he said. (The report showed the players here are publishers, ad servers, ad networks, exchanges, DSPs, SSPs and widgets. There are a lot of relationships here from which the publisher benefits.) “Further, there are a lot of great third-party data providers out there supporting marketer needs.”

But it gets problematic for publishers when you consider how third parties may be using their data to support the business of their competitors. According to the report, 42 percent of the data collection observed went on to fuel the business of competitors of the publisher whose data was being collected, up from 27 percent in 2011. McLeod illustrated how that might transpire: “This could be a marketer carpet-bombing users of a site with cookies so they can reach that site’s audience via exchanges, without having to buy premium inventory directly,” he said. “It could be a partner with tag on page – perhaps some ‘free’ widget provider – who is collecting data on users, monetizing that data by reselling it to others, and not providing fair compensation to the website owner.”

There are other issues presented in all this data collection – page latency, which diminishes the user’s experience on the site and can lead to a drop in search ranking and total revenues. McLeod also pointed out “a looming privacy risk. While there is rarely PII (personally identifiable information) at play here, there is the ‘trust factor’ to consider. The user has a relationship with the publisher, often codified in the sites privacy policy but always implicit in their brand, and the publisher is responsible for what happens to the user while he or she is on their website.”

Krux surmises, as we’ve said, that a lot of this data is being used to power RTB, and perhaps there’s some irony in the fact that for the average publisher, revenue from direct ad buys dwarfs that from programmatic buys. McLeod recognized this imbalance, and observed that at the moment, buyers outpace publishers in data savvy. “Publishers are clearly better at directly selling premium display ads than they are audience or data based ads, and their current sales percentages reflect that,” he said. “But folks on the buy-side are increasingly buying audience because it’s easier, cheaper and faster, as the tremendous growth in ad tech startups and RTB growth reflect.” All players in the market, he said, need to understand data and develop relationships with their partners whereby they understand where their data is going.

One of the general takeaways here is that publishers’ data is valuable, and if it’s valuable to third parties, they should figure out how to use that value to their own advantage. “It’s about more than just advertising – it’s really about how you power the entire consumer experience,” McLeod said. “The example I always go to is Amazon. Through deep insights and trusted consumer relationships, they serve up an amazing experience with every visit, one that spans content, commerce, and advertising. In my mind, that Amazon experience model is the yardstick for any web operator who wants to be data driven and audience aware.”

It’s probably worth pointing out that since part of Krux’ business is providing services for monitoring and preventing unwanted data collection, the company has a bit of a vested interest in illustrating the extent to which publishers are seeping data, but McLeod did offer some general, vendor neutral advice for publishers. “Many of our clients are finding that the technology and the business terms support and amplify one another,” he said. “For example, once a publisher has a way to audit data collection behavior, their clients and partners become far more amenable to accepting stricter terms on what types of data can be collected and by whom.”

The full report is available for download at the Krux website.

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