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In recent years, the data-driven business of online marketing has become an explosive growth industry. Just how big? About $62 billion in the U.S. in 2012, according to a new study.
The study, published Monday by the Direct Marketing Association, an industry group, was authored by John Deighton and Peter Johnson, a Harvard Business School professor and a Columbia University adjunct professor. It counted some 650 companies working in the personal data business.
The survey is part of an offensive strategy by the DMA, amid growing consumer unease about privacy online. “We’re seeing more attacks, more questions about the use of data-driven marketing than ever before,†said DMA vice president Rachel Thomas.
Taking a page from lobbyists for other industries, such as petroleum, DMA officials said they hoped that demonstrating the economic value of data would make policymakers think twice about pushing laws that clamp down on the industry.“If public policy decision makers muck around in this area, we really really believe they will do it at their own peril – and at the peril of the growth of the US economy,†said DMA CEO Linda Woolley.
The study tallied the value of the data market, including revenue generated from online ads themselves, from email subscriber targeting, and what publishers make from selling information to brokers.
It examined both online and offline direct marketing. Traditional offline marketing, provided by direct mail companies, was about a $93.6 billion dollar industry in 2012, the study said. The digital data industry includes firms that place tracking “cookies†on websites, companies that help target ads through an email address users provide to news organizations, and Web giants that track users’ purchases and searches to serve up targeted ads.
Increasingly, offline and online worlds are blurring: Direct mail companies buy demographic information from digital data brokers; Twitter and Facebook offer user data to television broadcasters. There are also newer forms of digital advertising, including mobile, which so far accounts for less than two percent of the market, the researchers found.
All these activities may be subject to more regulation in the near future. Hearings on data brokers and consumer data mining have been held in both houses of Congress over the last year. Nine major data brokers, some of which work with advertisers, are the target of a U.S. Federal Trade Commission probe whose results will be published later this year.
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Reporter for the Wall Street Journal
