Why First-Party Data is the Antidote to the Internet of Bots

Advertisers face a litany of challenges in targeting audiences in today’s internet age. Bots are increasingly prevalent across the Internet and digital platforms, with some estimates saying as much as 40 percent of total Internet traffic is bots and fake accounts. This means that advertisers are targeting audiences that provide little to no value and have almost no chance of converting into sales. 

Bots are proliferating on the Internet because simply put, there is a lot of money in them. Bots allow platforms to inflate their advertising numbers and solicit advertising campaigns that they will claim are going out to thousands or millions of relevant viewers. In reality, those “viewers” are completely irrelevant. 

Digital platforms have their hands in the pockets of bots and will use them to their financial advantage. But why do companies continue to deploy advertising campaigns on digital platforms if they are aware that bots are everywhere? Let’s explore this in more detail. 

Why Challenge The Status Quo?

The first reason advertisers target campaigns to fake accounts is the fact that they don’t have many other options. With fake accounts and bots across every major digital platform, advertisers have to choose between not advertising at all, or potentially pay to target some bots. 

The second reason is that audience data is very easy to fake. Third-party data – or data obtained from an outside vendor – is easily attainable, but unfortunately that also means it’s hard to separate good data from bad data. This means that advertising companies can create fake data at will, and they can even sell it to customers multiple times. A typical third-party data list might contain emails that are 10-years-old or more, and most of these lists certainly contain a number of fake users or other data that is completely irrelevant to the audiences it claims to be targeting. 

The good news is that advertisers are beginning to catch on to these industry norms and are working to ensure they aren’t wasting dollars and improving their return on ad spend (ROAS). First-party data is a critical piece to solving that puzzle. 

How First-Party Data Improves Ad Targeting

Data that is collected and owned by a company for their own purposes gives brands quality insights into their audience from people who they know are paying customers, also known as ‘deterministic’ data. As opposed to probabilistic third-party data – which makes educated guesses at audiences that are relevant – leveraging deterministic provides better return on investment in microtargeting campaigns. 

Companies that want to use first-party data but don’t know how can start small by asking customers just one question at the point of interaction. Many, if not most, companies aiming to get first-party data will aim to solicit survey responses from customers, which can be valuable. The problem, however, is that without incentive or compensation for doing so, customers will rarely give thoughtful or useful responses. Think about it, if someone asked you to do work without paying you, what kind of work would you do? Instead, if companies identify one question that they would really like to know about their customers, they can get data that is actionable and useful. 

Many companies fail to invest in soliciting first-party data because they assume that you can only target existing customers with that data, which is not true. Rich, first-party data can be used to build custom audiences by analyzing and comparing customer data to other deterministic, first-party datasets, and in turn building lists of audiences who share characteristics of their existing customer base. If this same process was used with a list of third-party data, you could identify similar audiences, but those audiences would share the same fake characteristics that plague third-party data today. 

Poor quality data makes up a large slice of the Internet pie today, but with more awareness of fake data, that will soon begin to change. As advertisers vet the data and platforms they use to target campaigns, undoubtedly the demand for and generation of first-party data will grow. 

This article was written by BDEX CEO David Finkelstein and was originally published by Modern Marketing Today.