Why Few Publishers Build Data Businesses

Few publishers have created new revenue lines out of their data, even though the digital publishing industry is struggling during a time when data is alleged to be the new oil. Jeremy Hlavacek is the head of global automated monetization at Watson Advertising, the division of IBM that includes its media properties like The Weather Company. Hlavacek spoke with eMarketer's Ross Benes about how Weather built a data business to complement its editorial product, and why few other publishers have gone down this route.

That is a valid argument. It's not a simple yes or no question. What we realized is that in our case, weather and location data are so pervasive and affect so many different media channels. It was a bigger opportunity to take the data off-property.

If you are running an out-of-home [OOH] billboard campaign, you really have very little data on who is seeing the campaign or how many people were near it. If you can give those companies a little bit of insight into how many eyeballs walked past their billboard, that's incredibly valuable. We thought we could really help some of these other marketers. It is not threatening to [cannibalize Weather’s media business]. It's just new marketers for us to create new business.

It's outlined in our privacy policy how we collect data, and we offer opt-outs to consumers. The general model is to be transparent and give consumers a choice.

Now if you're doing this in an underhanded way, where you are scrapping data off the ad exchange, or you don’t own the app and you just have an SDK in someone else's app, I feel like those will be riskier businesses.

I think that regulation will put a lot of pressure on middlemen. If you don't really own data, but you are trading it and selling it and repackaging it, your life will get more difficult if you don’t have a direct relationship with the consumer.

Some media companies have such big legacy businesses and they have huge print sales businesses, so even if you see print sales slowing down, it is still really hard within the company to say, “We are going to pull resources off of our legacy ad business and go invest in this new space called data.” It is just a tough sell. But it can be done—it’s just hard.