What are third party audiences?

In the world of digital advertising, reaching the right audience is everything. But what happens when you don’t have enough data about your potential customers? That’s where third-party audiences come in. These audiences are a powerful tool for marketers looking to extend their reach and fine-tune their targeting strategies.

What Are Third-Party Audiences?

Third-party audiences are groups of users categorized by external data providers, often called Data Management Platforms (DMPs). Unlike first-party data, which is collected directly from your own sources (like your website or CRM), third-party data comes from other companies. These DMPs gather information across various websites, platforms, and offline sources, creating comprehensive audience segments that can be bought and used in advertising campaigns.

How DSPs Like DV360 and TTD Use Third-Party Audiences

Demand-Side Platforms (DSPs) like Display & Video 360 (DV360), The Trade Desk (TTD), and others allow advertisers to purchase and target these third-party audiences to enhance their campaigns. Here’s how it typically works:

1. Audience Selection: Within the DSP, advertisers can browse and select from a wide range of third-party audience segments. These segments might include anything from “frequent travelers” to “tech enthusiasts” or “new parents.”
2. Integration: Once an audience is selected, it’s integrated directly into the campaign’s targeting criteria. This allows advertisers to reach users who might not have interacted with their brand before but fit the profile of their ideal customer.
3. Optimization: DSPs use advanced algorithms to optimize campaigns in real-time, making adjustments based on how well these third-party audiences are performing. For example, if a specific segment is driving high conversions, the DSP might allocate more budget towards it.

By leveraging third-party audiences, DSPs like DV360 and TTD enable advertisers to cast a wider net and engage with users who are more likely to convert, even if those users haven’t interacted with their brand directly.

The Role of DMPs and the Cost of Third-Party Data

Data Management Platforms (DMPs) are the engines behind third-party audiences. They aggregate data from multiple sources—such as websites, mobile apps, and offline transactions—to create detailed audience profiles. This data can include demographic information, purchase behavior, interests, and more.

Cost Considerations

Using third-party audiences isn’t free, and the costs can vary significantly depending on several factors:

• Data Provider: Different DMPs and data providers set their own prices, which can range from a few cents to several dollars per user, depending on the specificity and demand for the audience.
• Audience Size: The more users you want to target, the more it will cost. For example, reaching a niche audience might be more expensive on a per-user basis, but it could be more cost-effective if that audience is highly likely to convert.
• DSP Fees: In addition to paying for the data itself, you may also incur fees from the DSP for using third-party audiences. These fees could be based on the percentage of media spend or a flat fee.

While the cost of using third-party audiences can add up, many advertisers find the investment worthwhile due to the potential increase in campaign performance. By targeting users who are more likely to engage, third-party audiences can lead to higher conversion rates and, ultimately, a better return on ad spend (ROAS).

If you want to boost your productivity and have a programmatic ad copilot, we recommend checking out our Chrome Extension, AdsCopilot. It provides a digital ads assistant 24/7 to help you with tasks like this and much more.