What is Data Activation and How Does it Work?

Published: September 10, 2016 Updated: August 2, 2018 Author Category Data Management

When data-management platforms (DMPs) first started to appear on the scene, marketers and advertisers alike began relishing the fact that they could now merge all their data silos into one central platform.

Fast forward a few years and the excitement of collecting vast amounts of data from various sources and storing it in one place has somewhat subsided. Marketers and advertisers of today are now focused on the next level of data management — data activation and audience activation.

What is Data Activation?

Data activation is simply the process of putting the data stored in a DMP into action.

Data is like fuel in a car and audience data activation is the ignition — until you turn the key and start the engine, the car doesn’t do much. A DMP works in a similar way.

Sure, a DMP is great for collecting data from various sources and creating audiences, but its true potential lies in activation, which separates DMPs from other data-management systems (e.g. data warehouses and excel databases).

How Does Data Activation Work?

Activating the Data

In order to activate the data, we need to find the online identifiers of users.

This could be either a hashed advertiser ID (e.g. in the case of native apps), or a cookie (this is done with cookie syncing). We could also use a data-onboarding partner (e.g. LiveRamp) which will help transfer offline IDs, such as emails, phone numbers etc., into the online pool of cookies and device identifiers.

Then, we can utilize the data for a range of uses. Some of the most common include:

Media Buying

By far, the number one use case of a DMP is online media buying.

Let’s take a look at how a DMP can help an advertiser improve its online advertising campaigns.

Imagine you are an app-development company wanting to target Apple smartphone and tablet users with ads advertising your latest release. You could use both first-party and third-party data stored in your DMP to create an audience segment.

You could export this audience segment to a demand-side platform (DSP) and bid on impressions that will be displayed to a consumer in the US who is using an Apple smartphone.

DMPs not only help advertisers reach their target audience, they also provide detailed analysis and reports into a campaign’s performance, which is especially crucial if the campaign is running across multiple channels. This allows advertisers to continually optimize their campaigns to improve performance and reduce wasted impressions.

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Dynamic Advertising and Content Personalization

Dynamic Advertising

Dynamic advertising is nothing new — Google and others have been doing it for years — but thanks to a DMP, advertisers can take it a step further, or at least optimize it.

Traditionally, dynamic advertising focuses on display ads based on a user’s browser history. However, by combining online and offline first-party information with other pieces of data (e.g. browser history, location, device type, transactional data, etc.), advertisers can display a truly personalized ad to the right user at the right time.

Let’s imagine an airline wants to run a display campaign promoting flights. In a traditional, non-dynamic ad campaign, they could display the following ad to users located in the US.

Audience activation

The message in the ad is very generic and really only targets users based in the US.

Now, by creating an audience segment based on the data in their DMP and exporting it to a DSP, they could display an ad that looks like this:

Audience activation

The dynamic ad contains a message based on a range of different factors, including previous user behavior (e.g. an offline transaction), location, and even intent, not just browser history.

To add a bit of context to this example, the airline could onboard their offline data with their online data and display this ad to a consumer who has recently purchased a one-way ticket from New York to Chicago. By utilizing a range of online and offline data sets, the airline could predict that this user will be returning to Chicago in the very near future.

This type of dynamic advertising is only possible with a DMP, as there’s no other way to combine all these different pieces of specific user data together and create highly dynamic and personalized ads.

This dynamic and personalized approach to display advertising is being met with higher click-through rates (CTR), but more importantly, higher conversion rates, and with a DMP, companies can get closer to delivering the one-to-one, personalized experiences they are all striving for.

Content Personalization

There is a massive opportunity for publishers to increase revenue without having to spend a cent on display advertising, and it’s through content personalization.

By utilizing the power of offline and online first-party and cross-device data, publishers can personalize the content on their website to make it more relevant to the consumer.

The type of website content that can be personalized includes, but is not limited to, the following:

  • Product recommendations
  • Content (e.g. blog posts, videos, etc.)
  • Cross-promotion (say, a company like P&G with numerous brands)

The above can be personalized based on a user’s browser history, demographic data (e.g. age, nationality, etc.) interests, and even offline interactions.

Selling Data and Audiences

Most publishers make money by either selling products, services, or via advertising, but few realize they can add another revenue stream to their business by selling their data and audiences.

Publishers, especially large ones, collect massive amounts of user information, including demographic data, behavioral data, and device-type data, which advertisers consider quite valuable.

By selling their raw data and/or audiences to data brokers (e.g. Acxiom, Experian, and Neustar) or directly to advertisers, publishers can create an additional revenue stream.

There are, however, a couple of ways publishers can sell their audiences. For the sake of this example, let’s call the first approach fixed segments.

Fixed segments include audiences that are available at the time of sale. For example, if a publisher sells a fixed segment to a data broker or advertiser, they are selling the audiences that are in their DMP at the present time. If a new user were to be added to the audience after the sale, they wouldn’t be passed on to the buyer (i.e. data broker or advertiser).

For the second type, we’ll refer to them as live segments.

Live segments are the opposite of fixed segments in that all subsequent new inclusions and deletions are passed on to the buyer, which allows them to receive new profiles as they are created and manage things like frequency and recency — e.g. deleting profiles that have already converted. Live segments also greatly benefit the publisher as they receive a regular stream of revenue.

Data activation isn’t limited to the three examples given above, and it certainly isn’t limited to online display advertising.

The truth is that if there’s a will (data) then there’s a way (activation).

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Author:

Maciej Zawadziński, Piwik PRO CEO

Technology enthusiast and entrepreneur. Passionate about analytics and marketing technology. LinkedIn Profile

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