Big Data and Online Advertising: High Expectations
Everyone right now is talking about big data, which is viewed as the next great innovation challenge for marketers. The digitalization of the entire advertising industry is generating ever increasing amounts of data that must be collected, analyzed and interpreted. Using real-time and comprehensive data-assisted decision making, companies are hoping for significant competitive advantages by improving processes and creating more options for tailoring and personalizing services. Digital advertising is an important application for this personalization. Customized advertising will be more effective, cost less, and be better received by society. Companies like Google and Facebook are playing a vanguard role here, while their stock values demonstrate the economic potential that can be realized through big data.
A New Data Market Emerges
But advertisers are not the only ones who have high expectations for the possibilities of big data. Progress in database and analytics systems has opened the doors to this new business opportunity to more and more smaller companies. Figure 1 shows some of the players who are active in this new big data market.
Particularly in online advertising, many companies are trying to develop their own business ideas and claim a piece of the growing online advertising pie by using big data tools. In digital jargon, these companies are called third-party data providers. They are transferring the profitable data business, which large market research institutes like GfK, TNS, Nielsen and Comscore have established in the non-digital environment, to the digital world – user data that has been acquired through the analysis of user behavior on the internet, is sold and licensed.
But the undeniable opportunities are offset by substantial risks. The profitable use of big data is not without pitfalls, and some of the business models on the fringes of big data and online advertising simply do not work. These fledgling companies rarely succeed in achieving a competitive advantage in the market. Many are fighting for economic survival.