Understanding the Costs of First-Party Data Graphs

In the evolving landscape of digital advertising, building a robust first-party data graph and enriching bid requests are pivotal for maximizing addressability and driving value for both publishers and advertisers.

However, these processes entail various costs—both monetary and operational—that can vary significantly based on the chosen solutions. This article delves into the core elements influencing these costs and offers insights into effective management strategies.

The Fundamentals of Graph Building

A first-party data graph is the foundation for managing user data and connecting interactions across platforms, browsers, and devices to construct a comprehensive view of individual behaviors and preferences.

Core Cost Drivers:

• Infrastructure: Implementing and maintaining data collection tools, such as pixel servers and consent management platforms (CMPs), incurs costs. Additionally, investments in data storage solutions are necessary to handle large volumes of first-party data.
• Storage and Processing: Storing extensive datasets and ensuring compliance with regulations like GDPR and CCPA add to operational expenses.

• Tools linking identifiers across environments, such as email addresses and mobile ad IDs (MAIDs), often have licensing fees. Integrating Universal ID solutions like ID5 or Unified ID 2.0 may involve additional costs.

• Employing Natural Language Processing (NLP) technologies to analyze page content and append contextual signals to user profiles requires investment in advanced software and expertise.

• Adherence to global and regional data protection laws requires investments in privacy frameworks and regular audits, contributing to overall costs.

• Costs to negotiate contracts with multiple ID providers can be as high as $40,000 per contract.

The Mechanics of Bid Enrichment

Bid enrichment enhances the value of programmatic bid requests by appending additional signals, such as demographic, contextual, or behavioral data. This enables advertisers to target their audiences better, potentially increasing publishers' CPMs.

Core Cost Drivers:

• • Integrating enriched signals into Supply-Side Platforms (SSPs) and Demand-Side Platforms (DSPs) involves development and maintenance costs to ensure compatibility with OpenRTB protocols.

• • Depending on the depth and specificity of the signals added, accessing third-party data sources for enrichment can incur per-user or per-impression fees.

• • Implementing advanced AI and machine learning tools to decide which signals to pass dynamically requires investment in technology and ongoing tuning to adapt to market changes.

• Utilizing tools to track performance, detect gaps, and optimize outcomes requires additional resources and can increase operational expenses.

Balancing Costs with Benefits

While graph building and bid enrichment involve upfront and ongoing costs, they unlock significant value by enabling:

• Increased CPMs: Providing enriched bid signals can attract higher bids from advertisers, enhancing revenue.
• Effective Audience Monetization: Leveraging first-party data allows for more precise targeting, improving monetization strategies.
• Future-Proofing Strategies: Developing robust data capabilities prepares publishers for a landscape with diminishing third-party cookie support.

Key Considerations for Cost Management

1. Leverage Existing Data:
   • Utilize first-party data collected through user interactions to minimize acquisition costs and enhance data relevance.

• Optimize Signal Passing:

• Conduct testing to identify the optimal number and type of signals to pass in bid requests, ensuring cost-effectiveness and maximizing impact.

• Partner with Scalable Platforms:

• Collaborate with technology providers that offer streamlined solutions for graph building and bid enrichment, reducing the need for extensive in-house development.

• Audit and Optimize Regularly:

• Monitor performance metrics to refine processes, eliminate inefficiencies, and ensure compliance with data protection regulations.

Final Thoughts

Investing in graph building and bid enrichment is essential in today’s competitive advertising landscape. Understanding and managing the associated costs is crucial for publishers aiming to maximize return on investment. By focusing on scalable, efficient solutions and leveraging insights from industry leaders, publishers can position themselves for addressability success in a post-cookie world.

GrowthCode provides an addressability management platform that affordably and rapidly delivers identity graphs and supports a myriad of use cases like bid enrichment for safely monetizing the asset across the revenue portfolio. If you want to learn more about how we do this, how much it will cost, and stand up a proof-of-concept, reach out here.