Dive Brief:

• U.S. companies are expected to spend nearly $19.2 billion in 2018 on third-party audience data and solutions, marking a 17.5% increase over last year, according to new IAB research conducted with Winterberry Group, whose findings were shared with Marketing Dive. Marketers for the first time ever this year will invest more in digital data assets than in traditional "terrestrial" data, the report found.
• Spend on digital data will reach $3.67 billion, a 36.5% increase over 2017, while terrestrial data will reach $3.62 billion, up 2.5%. Transactional data will command $2.8 billion (up 3.5%), specialty/engagement spend will be $1.02 billion (up 50.9%) and identity will reach $850 million (up 50.3%). Spend on data management, processing and integration will reach $4.97 billion, a 25.1% increase. Analytics, modeling and segmentation investment will be $2.26 billion, a 2.9% increase. 
• Some of the increase in spending on third-party audience data has been spurred by the continued rise of programmatic advertising, per the IAB, and despite growing scrutiny into how consumer data is leveraged by businesses. In fact, the implementation of stricter data privacy laws like the EU's GDPR or the California Consumer Privacy Act have helped to drive investments in data management, processing and integration, according to the report.

Dive Insight:

With the implementation of new, far-reaching regulations like GDPR and high-profile controversies like Facebook’s Cambridge Analytica scandal, 2018 marked a landmark year for consumer data privacy. Rather than cooling spend in the space, however, these events have clearly encouraged marketers to invest more in solutions to better wrangle their third-party audience data and implement safer solutions.

Many marketers are currently feeling a push-pull when it comes to the acquisition and implementation of data, as calls for transparency and compliance grow louder, but do so at a time when consumers are also demanding better personalization and ad targeting, which is difficult to accomplish without more data. 

The programmatic space embodies the issue, having experienced problems related to transparency and brand safety for years without seeing a significant deceleration in spend. Indeed, by 2019, 65% of all digital media advertising spend will be traded programmatically, according to recent Zenith forecasts. Advertisers are projected to spend $84 billion programmatically next year, up from $70 billion this year, the group said.

However, Zenith also suggested that the transition to programmatic is happening more slowly than expected because of GDPR and other infrastructure investments related to data. On top of laws like GDPR impacting platforms and vendors, marketers also need to rebuild trust with consumers when it comes to how personal data is collected and used. Next year, CMOs are forecast by Forrester to be more proactive and champion customer data privacy, promoting the care they take with customer data as part of their business models. 

Marketers are more frequently looking to marketing automation tools to help with data management and analysis. Global marketing automation spend is projected to reach $25.1 billion by 2023 from $11.4 billion in 2017, according to separate Forrester findings.