How Many Third-Party Enrichment Data Sources Should You be Using?
Marketers who continuously evaluate their customer datasets, assess their existing data partnerships, and proactively seek out new and diverse third-party data sources are best positioned to achieve their marketing objectives.
Marketers have long known the value that data enhancement (otherwise known as data enrichment) can provide in filling in the gaps in the data that they maintain from their customers. Today, trends indicate that the same marketers that have historically prioritized this practice are increasingly leaning on incremental data enhancement to boost the performance of all of their data assets. That’s because, while zero-party and first-party data are crucial for deeper customer insights and better media targeting, incorporating high-value third-party data from trusted sources is the key to achieving next-level segmentation, personalization, and campaign results.
Developing and executing a data enhancement strategy is never a “one source and done” endeavor and is a core ongoing component of any marketer’s overall data strategy. To realize the full benefits of using third-party enhancement data, marketers must continuously evaluate, test, and integrate new and different datasets. Marketers should work with multiple data partners despite the fluidity that multiple data sources can create in a marketer’s internal ecosystem. Diversity of data types will create a deeper descriptive and predictive view of a brand’s customers, and that always leads to better marketing results.
Research on Third-Party Enhancement Data Use
In the recent Wiland-sponsored Digiday research report The State of Marketing Data Enhancement Data and Analytics: How Brands and Agencies are Using Data to Improve Outcomes, the use of third-party enhancement data by brands and agencies takes center stage. Fifty-seven percent of brand respondents surveyed as part of Digiday’s research said that they enrich their customer data with enhancement data from external sources, while 76% of agencies responded similarly.
In diving deeper, the report also reveals that marketers are turning to multiple sources to round out their marketing data needs.
How many sources of enhancement data do you currently use?
The majority of both brand and agency respondents—67% and 77% respectively—noted that they use four or more sources when it comes to enriching their existing data. This perspective suggests that marketers are leveraging unique and distinct sources of data to create more comprehensive views of their customers, predict their spending behaviors more accurately, and inform their outreach efforts. We believe that this shows an acknowledgement that using multiple third-party data sources is imperative to filling the gaps in marketers’ customer data and creating a more comprehensive portrait of their customers.
Why Using Multiple Sources for Data Enhancement is Mission Critical
Using multiple sources of enhancement data helps marketers build and continuously refresh a more robust, complete portrait of their customers. There are three main reasons that working with multiple data partners can help in achieving this depth of perspective:
- Data providers often specialize in aggregating certain types of data, with each data type contributing something unique to the picture. For instance, some data providers specialize in demographics, lifestyle and interest data, life event data, behavioral data, or social media signals. Data providers that operate cooperative databases understand the power of individual-level spending and share of wallet data, which typically fuel even more powerful models to predict prospect and customer spending. As we know, past spending behavior is the most indicative of future spending behavior, making it imperative that transaction data be considered in the marketing data mix for all data users. By working with multiple data partners, marketers obtain the diverse information they need to be confident that their customer view is as complete and robust as possible.
- Creating redundancies in data is an important step to account for shifting levels of coverage, accuracy, or depth. No data source is static, and it’s important that marketers have strategies for data redundancy in place for certain types of data, especially if they have high-priority data components that power their models, insights, or analyses.
- Different data types can have a unique shelf life, and these latencies can vary dramatically. For instance, a consumer purchasing major electronics, high-end furniture, insurance, or other substantial items or services may be actively in-market for weeks or months. But a person looking for a holiday gift or everyday apparel item has a much shorter in-market window of just days, hours, or even minutes. Working with multiple data partners can help marketers ensure that they’re ingesting and refreshing their data at the most appropriate cadence.
Data enhancement is never a “one source and done” endeavor. Marketers must continuously evaluate new and unique data sets.
The Importance of Continuous Data Evaluation
Marketers who continuously evaluate their datasets and external data sources while also seeking out new potential data partners are the best positioned to realize the benefits of data enhancement. This requires continuous testing of the external data’s ability to provide lift in marketing outcomes. So why should marketers maintain a test environment to thoroughly evaluate third-party data? Here are a few criteria that a good test environment will help you consider:
- What is the depth and breadth of coverage (how much data the partner has)?
- How many categories does the data cover?
- What is the recency and frequency of the data source updates?
- What are the match rates with my existing data?
- What is the data sourcing process, and are all privacy compliance requirements met?
- What is the accuracy of the data (often assessed using “truth sets”)?
- Are there data elements that cater to my specific goals?
- Is there the ability to create custom data elements tailored to my needs?
Ultimately, the best measure of success is found in the lift in performance (campaign response rates, website traffic, conversions, etc.) that a given data source provides. Marketers can drive this lift even further by more actively leveraging third-party data to customize their offers—using descriptive data elements to inform creative, offer, and ad copy. This will help brands break through the “noise” in the ecosystem and stand out by presenting particularly relevant messaging that speaks to each customer segment.
Each brand’s growth and marketing objectives are unique, so it’s only through testing and evaluation that marketers will discover the variables that are driving incremental performance. When working with data partners, marketers will find the most value from collaborating with those that not only offer new data, but also assist in the rigorous testing and analysis needed to achieve truly superior outcomes.
Tags: data collaboration data enhancement data enrichment marketing data third-party-data