To Co-Op or Not to Co-Op?

When mastering a data-driven marketing strategy, the inevitable question of "to contribute or not to contribute" data will come up. Read these considerations when compiling your pros and cons list on the critical topic of data co-ops.

Let me start by saying, I L O V E the data co-ops. As a long time veteran of both Abacus and Datalogix, I completely believe in the power of sharing transactional data, in a central repository, for the greater good of all marketers and ultimately consumers! Back when I worked for co-ops, we had strict guidelines in place to ensure fairness to all participants. Brands had to give data to get data; to contribute your data to the co-op in order to benefit from the aggregation of the data. The usage of data was then limited to the amount of data you contributed, so no one smaller advertiser could benefit from the years of work a larger advertiser spent building their customer file. And, you could put restrictions or blocks in place to ensure competitors didn’t have access to your data at all. There was no confusion as to what you the marketer was participating in. The rules of engagement were clear. The pro’s and con’s were known.

Let's revisit the definition of a data co-op before we go on. As defined by Whatis.com, A data co-op is a group organized for sharing pooled data from online consumers between two or more companies.

Within a data co-op, members offer relevant marketing data gathered from browsing and purchases of online consumers in a jointly accessible data store. In exchange for the data of their own customers, a member gains insight to consumers that they may not have had contact with otherwise. The data might also include information from consumers that have had contact with both companies.

With our ever-changing landscape and the continued and growing importance on data privacy, the rules of engagement for new marketing programs need to be clear as well. One gray area: data contribution. As we approach the upcoming California Consumer Privacy Act (CCPA) going into effect in January of 2020, now more than ever, it is critical for marketers to understand the rules around consumer data. Whichever side of the fence you land on with regards to data contribution, be sure you are in compliance and understand the safeguards around consumer privacy. 

As we follow some recent innovations in digital marketing, Web-powered direct mail (retargeting via direct mail), has emerged as a clear leader. Web-powered direct mail leverages the most relevant consumer data available, the greatest indication of intent to buy (browsing data of website visitors), and the most responsive channel for distribution of marketing messages. Retarget to your site visitors through direct mail.

So, what are the rules of engagement?

Web-powered direct mail calls for the transformation of an unknown site visitor to a known postal name and address. In order to create this mailable audience, a matching process will happen between site visitors and land name and addresses. Modeling will be used to differentiate the more responsive portion of the audience from the less responsive portion. Audiences will be mailed.

In order to participate in these types of programs, are you required to contribute data or not?

Well, first there is the known customer data; the names and addresses and/or email addresses of you current customers. Some providers will require the contribution of email addresses in order to create a pool of email addresses to facilitate the matching. Do you want your email addresses used by other advertisers and competitors, to enable this program and drive demand for their businesses? Remember, when doing so, you reap the benefit as well - the more advertisers that contribute their email addresses to this pool, the better the match rates will be.

Programs matching on email yield ~ 25% match rates in comparison to 70% match rates from cookie or IP Address based programs. In order to reach critical mass and scale, email based solutions need this data contribution, unlike the cookie and IP based solutions. Web-powered direct mail programs that transform browsers to postal address through cookie or IP address matching do not require data contribution. Be sure to understand how matching will be done so you can make an informed decision.

Then there is the actual browsing data. Some companies require the contribution of browsing data to create a pool of data, similar to the data co-operatives we’ve all grown to know and love, in order to create look-a-like audiences for retargeting. Based on the aggregate of browsing data, new audiences of potential customers will be identified. They aren’t browsers who have visited your site and shown intent, but they look like your site visitors who have shown intent. Do you want your most predictive and recent data being used to fuel the retargeting efforts of others? Again, in doing so, you benefit as well. But, not all web-powered direct mail programs require data contribution of browsing data to create audiences. Be sure to understand if browsing data contribution is required to, again, make that informed decision.

When evaluating programs like this, (web-powered direct mail, programmatic direct mail, retargeting via direct mail), understand the ground rules. Will you have to contribute data, whether it be customer data or site visitor browsing data? A simple cost benefit analysis will ensure you make the right decision for your business.