My grandpa always use to say “you get what you pay for!” This brings up the question is the same true for data? As the cost of acquiring data continues to fall, it is odd to me that so many data analysts who pride themselves on being skeptical have not stopped to ask themselves this question. There is an old saying in this industry “if you want to ruin something just add marketers”, typically heard on the sell side from publishers looking to make ends meet from their content and audiences. It started with the click and click fraud, and programmatic that started out as a means to sell remnant inventory until marketers began demanding to have the same access to premium inventory and has now spread to the data world where consumer data has been commoditized by some compilers looking to disrupt the market withWal-Martt like pricing. So while marketers think they may be getting a great deal they may also be falling into a trap of their own making. Consider the cycle and what goes into consumer data even for compilers.
The cost of acquiring the data – There is no such thing as free data. All data costs someone something and like anything else, the further down the waterfall the more that data will cost. Getting to the source for most is the only way margins are made. For sellers, they control the market to a certain degree but need to hold tighter reins on the data if they are to keep the margins where they need them. For compilers, a deal where permission is given to buy once and sell many times can give them the room they need to actually make money from acquiring the data, but can also mean that same data becomes commoditized quickly and they can often undersell their suppliers. This is where prices begin to drop and the margins begin to get so slim you begin to see companies go out of business or cut corners in order to meet the margins they need. In turn, this causes headaches for those buying the data because they now have to be more careful about what they buy and what they get as a final product. If you are a marketer and are having problems with data quality it could be because suppliers are cutting corners in order to meet margins after being low-balled on pricing. It sounds evil but this happens in almost every industry everywhere. The ones doing it call it being disruptive these days.
Who owns the data and what is a “fair” price – This comes down to a matter of negotiation or opinion. In the world of commerce, the publisher owns the data and then negotiates with the buyer who then becomes a supplier to others (aka distribution). This is common and how almost everything works. So where the margins are made and how much is made depends on negotiation early on. Publishers/suppliers need to be able to trust their buyers and lock things down well in the contract phase. To no one’s surprise, this is where the arguments typically begin. How much freedom to sell the data or create other products with it to profit from the buyer has when he takes it to market is important. For those on the buy side once you begin to see the work that goes on in the background to append data and create segments, categories and audiences you begin to see where a $0.50 CPM might make the skeptical alarm go off even with aged data of over 30 days.
How to buy data – There are a few key things to keep in mind when buying data if you want to get the best but not commoditized price.
- Always test the data first – In order to know what you are getting always get a small but meaningful sample of the data to test the quality. Throw it up against a known quality database to see how it fairs, how much lift is there, and if the results look right.
- Have a scope preplanned – Knowing what data points you need and spelling that out in exact detail before making a purchase saves time and money on both sides.
- Buy in bulk – While there may be times you need a small niche audience, whenever possible you will always get better pricing on large orders.
- Test Again – If you think you got a really good deal, always test again. Take the time to make sure what you got was what you ordered, the number of Uniques are correct, as well as the fields you asked for are populated correctly and the file has had hygiene run on it and been checked.
- If it feels too good to be true it doesn’t always mean you are just a good negotiator. It may mean someone up the waterfall is going to be cutting off that supply because it has been undersold or not sold properly and when you need more that supply will no longer be there or you will be paying substantially more.
- Never negotiate from the bully pulpit. If you are a huge company it is always good to be king and negotiate from a “we are a huge company and you should do anything to work with us” stance. In the end, you will be spending a lot of resources and time constantly having to find new sources or sources with better quality because the suppliers you do this to are unable to keep the lights on selling at the prices you demand.
The bottom line – All of this may sound like a jaded point of view but you have to look no further than the current state of retail to see what happens when big companies sell product cheap in large quantities and make people believe they are getting a deal. Match up a $10 Wal-Mart t-shirt against a $45 Tommy Bahama t-shirt and see which one you are still able to wear three years later. Quality and trust always come with a price.
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