Second-party data relationships have traditionally been secured through direct partnerships requiring a high level of trust. Today, the need for trust is even greater with consumers in control and defining what data they feel comfortable sharing. In a time when data collaboration is more important than ever to building competitive advantage, how can second-party data partnerships flourish in service of consumers who are more knowledgeable and protective of their data than ever before?
Hear Vihan Sharma, Managing Director, Europe, LiveRamp, and Bruce Biegel, Senior Managing Partner, Winterberry Group, discuss the state of second-party partnerships in the era of consent, and how companies can set themselves up for data collaboration success globally. Or, read an edited transcript below.
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Edited transcript:
Daniella Harkins:
We’re hearing more about data collaboration and partnerships these days as companies use them to build customer intelligence and create the experiences you and I love. It’s data collaboration at work when we get Disney Plus with our Verizon plan or collect airline miles when using a particular credit card. But how are these second-party data relationships faring when consumer awareness of data privacy is at an all-time high? How do you assure consumers that you respect their privacy while establishing trust and building new partnerships? There’s a lot to unpack on data collaboration, so we invited two experts on the topic to discuss the latest. Here’s Vihan Sharma, Managing Director, Europe, LiveRamp, and Bruce Biegel, Senior Managing Partner, Winterberry Group, discussing where we are now with data collaboration, and where it’s headed beyond marketing.
Vihan Sharma:
Bruce, welcome, and thank you for taking the time to join me for this podcast. I’m excited to have this discussion around second-party data with you. First of all, how would you define second-party data relationships? How are you seeing this definition change over time?
Bruce Biegel:
Vihan, it’s great to speak to you again. I wish we were together in person, given that I’m coming from Miami today. It’s been interesting, because people thought of second-party data in the context of a co-op, and as the tech world matured in user identity, it became simplified down to being somebody else’s first-party data. But it’s also what we would hear if we were an IAB, and especially with GDPR, CCPA, and CPRA, you need to be more precise in the world of data and identity than when we were starting in the field. When I think about second-party data, it’s data that is shared in an environment that can be hosted by a third party, a brand, or a supplier. It’s the act of commercialization that changes the data. If I sell or license that data to someone else, it becomes third-party data. So, I have my first-party consent-based data, my partner has their first-party consent-based data, and we can put those two together and have a second-party data asset in a second-party data repository.
Vihan:
Yeah, that is fascinating. I love the distinction of a first-party data set that is actually second-party, and then it becomes third-party. It’s a new way of thinking, which is only going to progress. As part of the research that you and the team at Winterberry did over the last few months, were you surprised to see marketers define second-party data in such different ways?
Bruce:
Understanding second-party data depends on where you sit. If I was on the measurement attribution side of the business, I saw it one way. If I was contributing data employed out of a co-op, it was something else. Depending on my role in the organization, I had a different perspective. I came from the offline world into the online world, so I think about second-party differently. It also relates to the notion of partnering. How do you partner with people? Who are your partners? If I’m partnering across from one brand to another within the company, do I think of it as second-party data? We’re all part of the enterprise, only the consent permission is different. I don’t think about it as first-, second-, and third-party, I just think about what rights I have and what can I do with it. Were you surprised to see the findings in the Winterberry survey?
Vihan:
I was indeed surprised that people thought about second-party data in the way they described. When I talk to customers in Europe, they have a slightly different way of looking at it, versus what we see in the U.S. In Europe, companies or brands want to better understand their customers. That is the basic principle of having access to data. I think in the adtech or Mar Tech ecosystem, we talk about activation or measurement or other outcomes. Whereas if I’m a brand advertiser or a brand marketer, the capacity I have to understand my customer is very limited if I only rely on my own data, so I purchase third-party data assets, because since GDPR, the notion of a third-party data asset is becoming nonexistent. We are seeing advertisers looking to create new partnerships to better create a single customer view. This is such an old word, right?
Bruce:
What, you don’t want a 360-degree view of your customer?
Vihan:
I don’t think it was ever actually completely possible to build the 360-degree view, but whatever was possible has been divided by three, four, five, because this notion of third-party data availability has disappeared. But it’s also an opportunity for advertisers to create new partnerships to access data sets in order to get a better view of the consumer. That is what we basically hear about second-party. It’s more about wanting to complete the view of the customer—whether I activate or whether I measure, I just don’t have access to data. I know other companies have access to first-party data, which is interesting to me. How do you get access in a privacy-friendly way? That’s what we’re seeing.
Bruce:
That brings up two points. First, regarding developing insights, somebody used to say when I was in the business, “you have 500 attributes on your data file about these individuals or this business and somebody else has 10,000 attributes, but the modeling people are only going to use seven.” The problem is, every analytics professional, depending on the problem they’re looking to solve, could have a different seven. You wind up needing hundreds and thousands of attributes to choose from. So, when you’re going to build the insights, directionally you know what you’re looking for, but you don’t exactly know what that key attribute or indicator will be. As the role of analytics has changed and there’s more science and better tools being applied, we want all the data. Nobody can have all the data, but we want enough. We need a partner with assets—intent or contextual assets, or transactional data—that can put all of that in a place we can safely share. Safe is a big word, because I think when I partner, it’s not just about the rights I have and what I can do with it, but it’s also about security. I need to be comfortable that the data is moved to a secure place. Was the data consented, do I have a right to look at it? Do I have permission from my partner to look at? That could be between a brand within itself or maybe your brand and their agency. Or it could be brand to brand. It comes down to, what permission do I have, because I don’t want to expose my data and wind up in trouble. So, as we think about this notion, we think about how to partner. What are the rules of the road? Vihan, I know you’ve been working a lot on this as you’ve been rolling out Safe Haven. What do you see from your customers?
Vihan:
The notion of control was important when we started talking about Safe Haven as a platform. Advertisers need to be able to trust that their data is not going to be misused. Historically, when running a particular campaign, you used a third party to do the matching, and you felt comfortable because you were sending the files to somebody you trusted. However, in a lot of industries, like retail, CPG, or travel, you have a network of partners who have a very different way of looking at each other. There is no inherent trust between parties, so when we started building or thinking about Safe Haven, we wanted to ensure that we bring a level of control back to the parties that collaborate with each other. As an advertiser, when I am permissioning a data set that can only be used for insights, I want to ensure that the platform I am going to use has the capability to restrict usage of that data to insights only. This is how Safe Haven was built. We are seeing advertisers who want to share a particular view with partner A and share something completely different with partner B, so we wanted to build those capabilities into a platform to make collaboration easy, and at the same time allow you to control exactly what data you share and who you share it with. Brands need a collaboration engine that can handle this kind of complexity in order to feel comfortable partnering with multiple companies using a single platform, because it’s all about scale. You want to be able to have a network effect as an advertiser and having multiple partners unlocks value. That’s a trend we see coming along in the market, and we believe it’s crucial for success. Bruce, when you look at advertisers, are there other industries outside of retail CPG that are thinking about collaboration as a key driver of change within their business plans?
Bruce:
With the rise of retail media markets and retail marketers, we’re seeing a bigger emphasis on how a brand shares data with their retail partners. I think the two that are most challenged are financial services and health care, yet, for insight, this is far more approachable. The interesting thing is, if a bank or a credit card provider has a partnership with a co-branded card, a travel company, a hospitality company, et cetera, they’re already sharing, but you were careful about what the credit card company could take in and promote, it was not bidirectional, and there was not enough of a view. This really enables those types of partnerships to go to the next level. In health care, they’re moving in the right direction, but again, that data is even more sensitive. Auto was less in the sharing mode, but I think they’ve done a lot of use cases, especially globally, because of the scale of the manufacturers and the fact that in some areas, the dealer network is separate from the automotive brand.
Vihan:
We have been talking with our customers about digital transformation for a long time. It was always a key topic, and COVID-19 changed and accelerated it. Collaboration is one of the foundational elements required for the digital transformation of an enterprise. Companies have many brands within their own holding environments but they don’t share data. They may have a huge partner network, but everybody is keeping their data within their own environments because they can’t trust what is going to happen with it. Digital transformation isn’t just about technology, it’s also about access to data and the ability to leverage technology to create new insights and outcomes that we haven’t seen in the past. Have you seen advertisers and brands thinking along these lines about digital transformation?
Bruce:
I like to think about them as “companies” and “enterprises” now, because I think the use cases go beyond advertising and marketing. If I’m doing a digital transformation project, I’m trying to do supply chain optimization. I need to be able to understand that data and feed it forward and back, but some of that data is proprietary. You need to be able to collaborate with your supply chain, whether you’re in the advertising world or on the product side. I see a lot of product applications around this. I remember doing a data strategy assignment and the first part of it was a data assessment, and we discovered that we couldn’t find the data. It was squirreled away in every little nook and cranny. GDPR forced us to change by taking the data out of the silos. If somebody asks for the data, you need to be able to provide it back, so I think regulation has been good, because it forced the market to prepare for this next generation of collaboration.
Vihan:
I totally agree with you, Bruce. I think having a proper first-party data asset is probably the first thing you need to do if you are thinking about collaborating at scale. In the retail ecosystem, clients are not only asking us for marketing use cases, but they’re trying to do new, innovative things based on other parts of their businesses. My next question is around some of the challenges. When you speak to the different advertisers, agencies, adtech providers, etc., what are some of the key challenges that you see around collaboration and second-party data?
Bruce:
There’s a degree of access requirements and objective-setting, and if you’re not clear on your objectives, someone is not going to say ‘great, let’s just throw the data in there,’ because of the barriers of compliance, IT, security, privacy, etc. I think the market has been focused on a first-party data strategy, but as you also saw from the survey data, it’s still in process.
Vihan:
I think when we look at collaboration, we talk a lot about data clean rooms, or being able to do measurement in walled garden universes. Fundamentally, we believe collaboration is a life cycle. You need to have your first-party data and be on a journey where you’re not just talking about campaign measurement. Clean rooms are an important and integral part of our advertising ecosystem, but I think collaboration overall as a concept is much larger, and as you mentioned, it goes beyond just advertising. How would you advise brands that are thinking about second-party data collaboration to think about this journey?
Bruce:
You don’t market in just one garden, it’s an entire landscape. A customer goes in and out of different gardens, into private gardens, and onto the open web, and you have to think holistically about that journey. We behave differently depending on where we are, so we need insight from multiple places. Having a clean room that works with a particular walled garden is only part of the answer. I may need to take insights from one source and apply those learnings to the next set of customer journeys and the next set of data, so I get a more holistic picture. Measurement attribution is hard, even in the best of times, so when you lose pieces and you’ve got all these black holes, it gets even harder. But I think you’ve got to walk before you can run, so picking the use cases that allow you to operate across the broadest part of the online and offline ecosystem is probably going to benefit you the most.
Vihan:
I think we are at the beginning of what collaboration will look like in the future. One of the key trends, the non-movement of data, is an important part of the story. It’s about regulation and trust. Clients need to feel comfortable that their data sits within their own control. If they feel comfortable, the chances that they will collaborate or share a view of that data is higher than in a state where you are moving the data. Today, most industries are migrating data to the cloud, and in order to be successful, you need to ensure that your technology can work across these different environments where the data actually lives. Having something like DataFleets was a key requirement for us for those two trends—building trust and ensuring that you can collaborate across the multiple clouds—which are going to be important for data management going forward. Bruce, do you have any recommendations or guidance that you would like to offer, or predictions that you would like to share?
Bruce:
I do think we are going to see accelerated growth as we get into 2022 and 2023. I don’t think the changes the browsers are making will hold back collaboration, because it’s not just about them and what they do. We’re going to see the extension of these technology use cases. I think that the process of digital transformation takes longer because everybody’s worried about cookie deprecation and the market is in movement. The death of the cookie shook up the environment. Last year was talk, this year is action, next year is a dose of reality.
Vihan, this was great, it’s always good to talk to you. Hopefully, we’ll be in San Sebastian or Cadiz or Paris when we have our next conversation. Thank you for having me on today.
Vihan:
Thank you, Bruce, it was very nice to talk to you as well.
Daniella Harkins:
Thanks to Bruce and Vihan for a wonderful primer on where we are with data collaboration. If you want to learn more, join our webinar on March 25th at 10 am PT, featuring Bruce Biegel from Winterberry alongside Gareth Davies, VP Product, Safe Haven at LiveRamp. They’ll be discussing ways to jump-start a data collaboration strategy, outlining a road map for success, and identifying pitfalls to avoid. Watch now.