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Mobile apps, the value of second-party data and its democratization

by Katie Jansen on Apr 27, 2017

There are three main categories of data that publishers and brands have access to:

  • First-party data, which your users produce and you own. It’s fresh and secure but finite in scale;
  • Third-party data, which is generated by other platforms and often aggregated. There’s lots of it, but It’s usually stale and difficult to validate, plus anyone can buy it, making ROI questionable; and
  • Second-party data, which is first-party data that someone else owns (i.e. a competitor or partner). When combined with your own first-party data, it has tremendous value in all phases of the customer journey.

Second-party data has huge commercial appeal but it’s also tough to incorporate in a mobile-first context. That’s why, up until recently, it’s been only large global companies, such as Facebook and Google, that have been able to trade in and apply second-party data in their business operations, either through direct private deals, or a trading desk, such as MediaMath or Krux. Facebook and Google will remain the forerunners in this space, but there are excellent emerging opportunities for smaller players.

New innovations mean that pretty soon any developer, or brand, of any size, will be able to leverage second-party data. This is of tremendous interest to those who want to offer customers a more personalized experience across different screens, social networks and communications channels. A couple anecdotal examples of what can happen when brands share second-party data:

A public transit agency partners with a ride-sharing app: 

A mid-sized public transit agency, struggling with declining ridership and funding cuts, partners with a ride-sharing app to provide users of each service with a convenient way to discover, purchase and track trips across both modes of transport. The partnership creates additional revenue opportunities for each partner while also making it easier for the consumer to get from A to B.

A micro-brewery partners with an app for finding food trucks: 

The proprietors of an emerging brew pub want to reach more potential customers with the idea that their IPA is great with spicy food. They partner with a food truck locator and review app to promote their beer with native in-app ads, push notifications to users when certain food trucks are on the same block as the pub, and collaborate on a content marketing partnership that highlights recipes and event planning tips featuring each other’s brands.

Why it matters

Sharing data is crucial in a mobile-first world. Why? Mobile users’ demand for quick, quality experiences and engagements are seemingly endless. This requires brands and developers to constantly gather, analyze and apply data in new ways. To this end, a series of complex, data-driven technologies have evolved and are now converging to provide more personal experiences (prescriptive analytics, AI, contextual commerce, etc.)

The data-rich mobile apps that deliver these engagements to consumers are becoming more complex to deploy and safeguard, meaning they are also draining engineering resources away from other tasks, increasing business costs. To continue to give consumers what they want – more, better and individually exclusive experiences – it’s essential to manage the risk out of deploying and supporting these apps, and manage more revenue opportunity in.

And that’s where the democratization of second-party data comes in.

Opportunities and benefits

The shift to mobile has greatly changed the way consumers discover and buy. Competition for attention is fierce and brand loyalty is on the decline. In order to retain customers and grow new market share, brands need to get more from their data. The battle-tested way to accomplish this is by partnering with organizations that have a complementary market. From a business point of view, sharing data with partners that have a similar market address has three sets of benefits:

  • It provides your customers with valuable new experiences and opportunities, thereby increasing revenue per user, reinforcing loyalty to your brand, and improving retention rates;
  • It increases your addressable market, allowing you to quickly scale revenues and gather more app or device-level data from target demographics, psychographics and behaviors; and
  • It allows you to mine this expanded pool of data to surface new insights and create products and services finely-tuned to your market’s interests, preferences and proven buying triggers, making product development and marketing efforts more efficient.

Mobile users want their mobile experiences to be faster and more intuitive. They want great functionality, beautiful design and utility, and they want it all now. Brands and publishers can deliver these things by sharing second-party data that’s synced across devices and channels, and do so securely.

The urgency to democratize data should be felt most acutely by media companies (who are pushed to deliver ever more robust options to advertisers), consumer retailers (who must create personal engagements to compete for every dollar), and app developers, who must find a way to deliver mobile-first experiences that both cater to the ad and retail industries, and delight users.

Democracy in action

So, exactly how can any publisher or brand create this new world of high-value experiences for users while simultaneously deepening relationships with partners and advertisers? ‘Owning’ customer data is, was and always will be important for brands. But in the struggle to attract and retain mobile-first customers, it’s essential to adapt to new ways of doing business and eliminate the barriers between users and the experiences they want.

The democratization of second-party data, combined with the creative abilities of mobile developers and marketers, will open the door to a brave new world of personalized, mobile-first engagements with liberty, equality and opportunity for all.

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Katie Jansen is AppLovin’s Chief Marketing Officer. In addition to her work, Katie is an advocate for women in tech and equality in the workplace.

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