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Facebook's demand-side platform: It has the data, does it have the trust?

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3rd Nov 2015
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News that Facebook is planning to release a demand-side platform (DSP) next year confirms what those of us in the industry have known since the start — that programmatic is a true force within advertising. Technology allows brands to target customers based on real-time insights about who they are and what they want in ways far greater than humans can.

This may sound obvious, but ingrained beliefs about the value of traditional methodologies for years kept programmatic on advertising’s outer ring. Times have now changed. Programmatic has moved to the main stage, and Facebook is spurring it on.

A Facebook DSP product seems a positive development for the marketing community. Although it has not made the details public, it is fair to assume that the strength of its first party data will help marketers augment their tactical approaches to customers. The most effective customer campaigns are built on programmatic data so if more is available to buy, whatever its nature, the better it will be for advertisers. But with limits to its data set and high community expectations around data integrity, Facebook’s DSP will not sail into the market without challenges.

Facebook challenges

First, it will be competing with third party data, which offers a depth of audience perspective that first party data misses. Today’s ad world is one in which consumers dictate the nature of their interactions with brands. In order to be effective, marketers must gain a sophisticated understanding about what customers really think, what they are saying in conversations, how interested they are in products or services, and the degree of their purchase intent.

Only third party data, with its capacity to draw from billions of sources, can bring these specific insights. The deeper into the data marketers can go, the more they’ll understand who they’re talking to. And the more human they’ll sound in the way they talk. Marketing successfully to brand-savvy consumers depends on both sharp audience targeting and creating human-centric campaigns.

If advertisers need more than first party data, what value then will Facebook’s DSP bring to programmatic? As well as a high volume of user profiles, Facebook will be able to offer valuable cross-device insights to marketers who are looking to reach people with more messages in more places online. Campaigning across different touch-points will only be effective, however, if marketers are able to tailor particular messages to customers in specific contexts. For this reason, Facebook’s data will need to be mixed with third party data to make any customer-focused marketing effort worthwhile. It may have merits, but on its own, first party data doesn’t provide marketers with all the tools for reaching the right people at the right time in the right place.

Another challenge facing Facebook will be proving the credibility of its data. Brands can’t afford to build campaigns based on data that has not been reliably sourced. Customers have too many questions, for instance: How does that brand know this about me? Where is it getting its information? Key to a brand’s reputation is being up-front about the origins of its data and marketers will want reassurance that Facebook’s DSP stands up in this respect. Their own reputations will also be staked on the authenticity of their campaigns. Facebook’s willingness and ability to share information on the sources of its data and whether users have granted permission for its use in campaigns will be important in creating an environment of trust with data buyers.

The importance of trust

As a tech power player, Facebook may be able to do things its own way, but for independent third party audience data providers, this notion of trust is vital to business success. A trustworthy data seller can tell buyers precisely where their data comes from and where campaigns are running, and make this information readily available. Independent companies have worked hard to establish a programmatic marketplace based on reliable and honourable practices - Facebook is stepping into this marketplace and will be expected to behave in the same way. Marketers value accountability and will want Facebook’s word that its data has integrity. How Facebook responds to this remains to be seen and will play a large part in determining how its DSP is received.

One thing is certain. Facebook’s decision to expand its ad-platform business into the demand-side of audience data confirms programmatic’s place in advertising’s mainstream. Where once it was a niche way to widen the scope of audience intelligence-gathering, programmatic now forms the backbone of campaigns with precise, human-oriented targeting at the core. The best marketing comes from brands that treat people as humans, not sets of data. Being able to demonstrate this is now as important as the insights themselves.

In the future, it’s likely that other data-owners will seek out new ways to digest their data into DSP and ad-tech offerings as value-adds to their business. Yahoo has already launched a similar DSP product — if programmatic is seen by the world’s tech giants as the best way to develop an audience-focused business strategy, the rest will follow. And as the whole of advertising, both online and offline, continues to move rapidly towards targeting everything on audience, the value of programmatic audience data will only get stronger. However it plays out when Facebook’s DSP is released, programmatic is here to stay as the new trading currency for advertisers.

Kevin Tan is CEO of Eyeota.

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