Season 3 - Episode 11: Should you Buy Marketing Data?
Everyone knows that business decisions are best informed by good data. But, when you’re a small startup, good data is hard to come by, especially if your market is in its early stages of development. Enter the data brokers! You can just buy data about your market, and you’ll be on your way to startup success… Because I’m sure all the data you buy will be super-accurate, right? Let’s fire up the spreadsheets and talk about how buying data can help and hurt your startup!
Background Story
Dave here. We actually used a bunch of platforms to get our hands on market data. We frankly needed it - it made us a better sales organization and be more competitive in the market. We used a variety of platforms: GovSpend to get historical sales results from our competitors, ZoomInfo to get contact information for prospective clients, and more.
But not all the data was good. Chris constantly got calls from development offshoring companies long after he had left the business who were desperately trying to sell him (crappy) data. Some of the companies used questionable methods. What’s the right call here?
Outline
Good Data
Bad Data
Moral Dilemmas
Busted Myths
Myth: If you pay money for data, it will be accurate and complete.
Myth: Buying data can be a substitute for doing your own research.
Learnings
Good Data / Bad Data
From HBR’s “Buying Consumer Data? Tread Carefully.”:
“the average accuracy of gender segments classifying males [in a binary gender study] was only 42.5% — which is lower than the 50% natural chance of identifying men.”
If you do decide to buy data, try to stay with the narrowest of parameters:
“If they continue with targeted campaigns based on data brokers’ audience profiles, they may want to avoid using profiles for broad segments of the population (all women, for example, or all consumers who are interested in sports). If the desired audience segment is relatively narrow, the campaign is more likely to be cost-effective.”
From HBRs “Why Buying Marketing Data Is like Buying a Used Car” (small study looked up data for 10 volunteers in three different vendor databases)
“Vendors showed enormous variability — as much as fifty-fold — in the number of companies and individuals they cover in various SICs. So if you want complete coverage of a certain sector, you need to select your supplier carefully.
“The data on individual records was remarkably accurate. We only found a few minor errors, when a contact record was available. So marketers can relax on the accuracy front.”
“Coverage of particular individuals was surprisingly spotty. Vendors simply don’t have every business person in their databases. In fact, one of the individuals was missing from all of the databases studied.”
Moral Dilemmas
In any event, we always questioned the means in which the data was collected. In any event, make sure you can sleep at night.
Summary
You don’t know what you’re getting. The data could be accurate for the individuals in the dataset, but also be omitting people. Use the data as a starting point, and do your own research.
Look carefully at the sources of the data. We had better experience with data coming from public records, freedom of information, etc.
Data And References
Buying Consumer Data? Tread Carefully.
https://hbr.org/2020/05/buying-consumer-data-tread-carefully
Why Buying Marketing Data Is like Buying a Used Car
https://hbr.org/2010/07/why-buying-marketing-data-is-l