How Effective Is Third-Party Consumer Profiling and Audience Delivery?: Evidence from Field Studies

Forthcoming in Marketing Science - Frontiers

33 Pages Posted: 16 Jul 2018 Last revised: 14 Jun 2019

See all articles by Nico Neumann

Nico Neumann

Melbourne Business School

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Timothy Whitfield

BurstSMS

Date Written: May 16, 2019

Abstract

Data brokers often use online browsing records to create digital consumer profiles they sell to marketers as pre-defined audiences for ad targeting. However, this process is a `black box': Little is known about the reliability of the digital profiles that are created, or of the audience identification provided by buying platforms. In this paper, we investigate using three field tests the accuracy of a variety of demographic and audience-interest segments. We examine the accuracy of over 90 third-party audiences across 19 data brokers.

Audience segments vary greatly in quality and are often inaccurate across leading data brokers. In comparison to random audience selection, the use of black-box data profiles on average increased identification of a user with a desired attribute by 0-77%. Audience identification can be improved on average by 123% when combined with optimization software. However, given the high extra costs of targeting solutions and the relative inaccuracy, we find that third-party audiences are often economically unattractive, except for higher-priced media placements.

Keywords: Consumer Profiling, Programmatic Advertising, Targeting, Segmentation, Big Data

Suggested Citation

Neumann, Nico and Tucker, Catherine E. and Whitfield, Timothy, How Effective Is Third-Party Consumer Profiling and Audience Delivery?: Evidence from Field Studies (May 16, 2019). Forthcoming in Marketing Science - Frontiers. Available at SSRN: https://ssrn.com/abstract=3203131 or http://dx.doi.org/10.2139/ssrn.3203131

Nico Neumann (Contact Author)

Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

100 Main St
E62-536
Cambridge, MA 02142
United States

HOME PAGE: http://cetucker.scripts.mit.edu

Timothy Whitfield

BurstSMS ( email )

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