The Six Things You Should Consider Before You Buy Data - Lift361

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The Six Things You Should Consider Before You Buy Data

By Ed Higdon. Posted in Insight

January 08, 2020

Even if a retailer has collected data for a long time, there are situations when in-house data might not seem like enough. In those situations, many retailers choose to buy consumer data from other sources. Buying data can help retailers improve online messaging and targeting, but there is also a lot of room for failure. Outside data can be difficult to use, impossible to use or inaccurate. Before you buy data from an outside source, make sure to consider these six things.

One: Know Your Data Classifications

Data is classified in three ways, based on the entity that collected the data and the entity that uses the data:

  • First-party data is collected by the retailer from its stores and website. This data is sourced and owned by the retailer and is often considered to be the most valuable type of data for marketing purposes.
  • Second-party data is someone else’s first-party data. For example, Facebook collects data on people who engage with a retailer’s profile, then provide that data to the retailer.
  • Third-party data is collected by an outside vendor or data aggregator. That vendor doesn’t have any specific relationship with the entities it sells data to, it simply collects information and then sells it.

Second- and third-party data can be extremely useful for targeting new audiences and for gaining a more robust understanding of consumer profiles outside a core customer base. However, it is important to ask some critical questions before buying data from an outside source, especially third-party data.

Two: What Do You Need to Know About Your Audience?

Buying data for data’s sake can be a waste of money and other resources. Before buying any data, goals should be clearly defined. It helps to understand the gaps in first-party data – where is it incomplete? What questions do you still have about your customers and potential customers? Those questions may include things like:

  • What are your audience’s motivations?
  • What are their interests?
  • Are there better places to reach shoppers?
  • What are people’s perception of the brand?
  • Would second-party or third-party data be best?

Three: How Was the Data Sourced?

Always examine the way a data provider collects information, especially third-party providers. First, you want to ensure it was ethically sourced. Then, you want to understand the methodologies the provider deployed and whether the data was validated. Typically, companies that sell data acquire that data from multiple sources and then compile that data in ways that are meaningful for their target customers (i.e. retailers).

Four: Is the Data Accurate and Up-to-Date?

Data cannot be considered quality if it is not accurate and recent. Ask the provider how often their data is updated, how it is updated, whether device IDs, user IDs and IP addresses are taken into account and whether the data is compliant with any recent changes in regulations.

Five: Will the Data Be Easy to Access?

To leverage purchased data effectively, it must be easy for internal teams to access and analyze. In some cases, large retailers can take the interim step of integrating the data into existing platforms, but if the budget isn’t there, it will be important to consider whether the provider makes the data easy to access and interpret through a user-friendly platform.

Six: How Much Does the Data Cost?

Typically, data is priced at CPM (cost per thousand unique views) and can range from $1 per CPM to $50 or more per CPM. However, data segments can be priced differently, and many vendors are starting to break from the CPM model. When requesting quotes, be sure to compare apples to apples and to study the source and quality of the data before assuming that the most expensive data is the most valuable. It’s also worth noting that the data you purchase may come with a limit on how many times you can access it and/or for how long.

Are You Looking to Get More from Your Data?

Purchasing and leveraging outside data effectively can be a challenge. If you are looking for ways to get more from your first-party data, or if you need advice or help integrating second- and -third-party data into your marketing efforts, contact us today.