prospecting1Data sharing co-ops are emerging in digital advertising… but are you surprised?

Advertising co-ops are nothing new – we’ve seen them in advertising for years. According to the IAB, co-ops date back to the 19th century. These early co-ops were agreements between manufacturers and retailers to share advertising costs and generate brand name awareness. Small businesses in particular benefitted from the increased exposure, at lower costs, that co-ops afforded.

Modern-day Co-ops

Today, co-ops are re-emerging in digital advertising to provide new possibilities for audience targeting. Modern-day co-ops still provide businesses a unique opportunity to target customers more efficiently – but unlike the advertising agreements of old, these data co-ops are powered by statistical models rather than one-to-one exchanges.

In the new digital marketing co-ops, data is the currency. By volunteering to share their own anonymized customer data, marketers can get access to new audiences, getting the biggest bang for their buck.

Data co-ops are steadily gaining traction among advertisers: according to a March 2015 study conducted by Emarketer, 11% of marketers participate in co-ops to find new customers and personalize marketing campaigns.

The Sharing Economy

The new data co-ops are a shared economy for advertisers. Most simply, a sharing economy refers to a system where owners rent out a product or service for some sort of fee, often to monetize excess supply. The shared economy of data lets owners capitalize on first-party data they’re already collecting.

There are many familiar examples of the sharing economy built around consumer oriented use cases. Companies like Uber, AirBnB, and LendClub have grown tremendously in the past few years from individual users interacting through the platforms to share transportation, lodging, and funds.

Essentially, these companies match consumers with the products or services they’re looking for, when they’re looking for it. Owners profit on existing assets they already have at their disposal, while users get convenient access to services at a discount.

Similarly, B2B companies like CrowdSource and WeWork are tapping into the sharing economy to match supply with demand in an efficient and scalable way. These brands, essentially, have grown their own opt-in co-ops to connect audiences. The commonality across all of them is increased efficiency at lower costs: that’s why 61% of US internet users say they participate in the sharing economy because it’s cheaper.

Data as currency

In 2013, Deloitte released a report titled “Data as the new currency”, defining currency as anything that can be cashed out for goods or services, pay debt, or store value for future use. The report qualified data as a currency for possessing each of these qualities.

Like currency, data increases in value when access is restricted or exclusive to a small group. For advertisers, access to shared a data pool lets brands target unique audiences with personalized messaging – increasing brand awareness and growing their customer base.

Co-ops allow marketers to use their own data to “buy” more data to which they are typically not privy to. In turn, companies already participating in the data co-op get access to a new audience group – so in all, there is a net benefit for participating companies, and each has the opportunity to strengthen their own marketing efforts.

Why advertising co-ops are effective

Traditionally, brands have used third-party data to find target audience groups. These third-party user lists are expensive, and you can’t be sure that the list you’ve defined matches the specific individuals who are likely to be interested in your products.

For digital marketers, data co-ops offer a competitive advantage over buying third party lists:

Quality:

Traditional behavioral targeting uses high-level information to deliver ads based on static or demographic data. With third-party user lists, marketers can take a shot at what characteristics they think might define their customers, but they won’t always hit the target.

In contrast, advertisers who participate in a data co-op can target new users based on demonstrated behavior, rather than limiting rules. The shared co-op data is used to feed statistical models that analyze buyer purchasing patterns and target new customers who are likely to be interested in your products.

The AdRoll IntentMap™, for example, is an opt-in pool of anonymized buyer intent data with more than 1,200 participating advertisers. The IntentMap powers AdRoll’s latest tool for customer acquisition: AdRoll Prospecting. Marketers who opt-in to the platform gain access to a targeting model powered by algorithms that surf the pooled data to find new users that act like a brand’s existing customers.

Marketers get the most bang for their buck, because they’re getting in front of audiences that are most likely to convert.

Scale:

First-party data can be gathered from a marketers’ site traffic, CRM database, or customer purchase history. First-party intent data is an advertiser’s most valuable asset, but growing this data set can be challenging.

Fresh data (data that was recently collected) is stronger than data even a few days old. Advertisers with small user traffic or customer purchase history may take longer to build actionable first-party lists. Co-ops are a way to scale beyond first-party data to increase your targetable audience.

Diversity:

Are you a marketer with millions of site visitors and thousands of customers each month? You may not need to increase your scale, but you could benefit from diversifying your audience to take advantage of reaching potential customers you may not have considered before.

Co-ops that include many different kinds of businesses give members access to a diverse set of buyers. Say, for example, that you’re a sporting goods store that traditionally targets men ages x-z. In reality, there’s a much larger audience set that would be a good fit for your products that you’re missing out on. By participating in the shared economy, you’re able to find these users and expand your customer base.

The IntentMap is the largest pool of first-party data, with more than 1,000 advertisers already opted in.. Learn more about the IntentMap and AdRoll Prospecting.