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By the time 2018 ends, US firms will have spent more than $19 billion on third-party audience data and data activation solutions supporting their advertising, marketing, media sales and associated efforts. That’s according to the second annual IAB-led “State of Data” research effort [pdf] conducted by the Winterberry Group.

The $19.2 billion figure estimated in the research represents a 17.5% increase from last year, with the growth rates similar for third-party audience data spend (+17.7%) and data activation solution expenditures (+17.2%). However it’s worth noting that the $19.2 billion estimated to be spent on audience data and activation solutions is actually slightly less than was forecast last year. That’s because this year the report contains some “structural improvements” from the inaugural effort, which resulted in some changes to the initial spending estimates.

As such, while last year’s report suggested that US firms would spend more on data activation solutions than the data itself, this year’s edition comes to a much different conclusion. The study instead indicates that spending on third-party audience data ($11.94B) will be about 65% higher than spending on audience data activation solutions ($7.23B).

The estimate for last year’s third-party audience data spend has barely been revised, but the estimate for investments in audience data activation solutions has been cut significantly, by almost 40%. Data activation solutions refer to services and technology offered by third-party providers to support the activation of audience data.

The following is an outline of how US firms’ $19+ billion in audience data spending breaks out, per the report, along with year-over-year growth rates..

Audience Data: $11.943B (+17.7%)

The study examined 5 types of data that are available for license through third-party providers.

Digital: $3.666B (+36.9%)

The largest portion of audience data spending will go to digital data, per the report. This refers to online behaviors of customers and prospects across digital devices and media channels, and includes location data. This type of data also shows how digital users interact across different devices and media channels.

Terrestrial/PII: $3.618B (+2.5%)

US firms will spend more than $3.6 billion on data that reveals the personally identifiable information (such as name, email address, address) of their customers and prospects. This data is typically used for traditional and cross-channel campaigns, and also shows ways to engage with prospects and customers.

Transactional: $2.796B (+3.5%)

As with terrestrial/PII data, this segment of audience data spending is unlikely to grow much over last year. Transactional data refers to purchase history associated with audience members and segments. This type of data is used to determine interests and needs and is used to support personalization in marketing.

Specialty/Emergent: $1.017B (+50.9%)

A smaller segment of data spend – but the fastest-growing – Specialty/Emergent data refers to emerging channels that ofter unique and uncommon attributes but aren’t easily integrated with other data types – such as addressable TV and wearables. Such data provides insights into behavior in these newer channels, offering an enhancement to customer and prospect profiles and assisting in engagement planning.

Identity: $0.846B (+50.9%)

The smallest segment – but also among the fastest-growing – Identity data is that which helps marketers reconcile customer and prospect profiles that have been created from various touchpoints.

Data Activation Solutions: $7.231B (+17.2%)

The report identifies two data activation functions, as follows.

Data Management, Processing and Integration: $4.967B (+25.1%)

US firms will spend more on management, processing and integration solutions than they will on any single audience data segment.

This solution function is intended to help build and maintaining databases and other such resources for profile creation and CRM. This includes data management platform (DMP), customer data platform (CDP) and other identity resolution solutions. This is an area of interest for marketers who are looking to improve their contact data accuracy.

Analytics, Modeling and Segmentation: $2.264B (+2.9%)

Finally, US firms will spend close to $2.3B on managed services to assist them in developing insights about their audiences through segmentation, predictive modeling, measurement and attribution.

In last year’s report the IAB attributed the relatively low amount of spending in this area to analytics budgets being largely kept in-house.

Nonetheless, this appears to be an area where spend may increase: recent research suggests that agencies believe that insights and analytics is their top area of revenue growth in the year ahead.

The full IAB report – which contains information about investment drivers in data and solutions, along with detailed methodology as to how these figures were obtained – is available here [pdf].

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