The 3 Unbreakable Rules Of Data
 
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The 3 Unbreakable Rules Of Data
By Nana Gilbert-Baffoe, View comments

I recently read an article about how Amazon is using data from 3rd-party sellers using their platform, to compete against them. This got me thinking about how so many marketers and entrepreneurs suffer from disruption due to unwittingly leaking out proprietary business data that then can be easily used against them by competitors and current partners.

A Real World Example

Rain Design, a company that sells a hot product on Amazon, failed to realize that Amazon is a highly data-driven future competitor, until it was too late. Based on all the sales data Amazon collected, because Rain Design sold their products on Amazon, Amazon was able to launch a similar product at half the price. Now Rain Design doesn't make as much money as they use to and must scramble to  protect their business.

You can read the full article about what happened between Rain Design and Amazon here:
Got a Hot Seller on Amazon? Prepare for E-Tailer to Make One Too

How could this have been prevented? There are 3 rules you must absolutely follow to ensure your business continues to grow and thrive, even when operating in a cut throat competitive market.

Data is King!

DARPA Big Data
Image By DARPA (Defense Advanced Research Projects Agency (DARPA))

There are quite a few lessons to be learned and they all revolve around the central theme of Data.

Millions of people use Google because they have the best data to match your search queries. Looking at Facebook's recent blowout earnings for last quarter, advertisers are loving Facebook because they have the best ad targeting data. If you are a marketer of any sort, you too are a data collector and monetizer.

You "buy data" from ad networks. Then use a data analysis tool such as Prosper202 Pro to store and analyze that data. Finally you monetize your data via affiliate offers or your own products. The more quality data you can acquire and use, the easier it becomes for you to effectively compete.

This then leads us to the 3 unbreakable rules of data. By following these rules you'll avoid repeating the mistakes Rain Design made with Amazon.

Three Rules to Rule Them All

Rule #1: Good data should be guarded and not leaked out to anyone

Rule #2: Good data is a powerful tool and weapon. Be data-driven in all your marketing decisions.

Rule #3: Good data should be free flowing and never be locked up in silos.

Let's dive deeper into each of these rules.

Rule #1: Good data should be guarded and not leaked out to anyone

WinonaSavingsBankVault
Image By Jonathunder

Let's face it, we live and operate in a highly competitive world. With such a low barrier to entry, one of the best ways to stay competitive is to acquire proprietary data, that gives you an unfair advantage or edge over others.

This data must be guarded and protected at all costs, and in situations where data must be shared with 3rd-parties, you must build contingency plans that address what you plan to do to mitigate the risk of the 3rd-party using that data to compete against you.

What are some sources of data leakage for affiliates?

Referrer Data Leaks: The sites that you are buying traffic from will be sent to the network and advertiser of which you are sending traffic to. Sometimes this is a requirement for running the offer. But if this is not a requirement, you can wipe out the referrer as a way to mitigate this risk. Doing this is not meant to be a way for you to run offers in a non-compliant way. In Prosper202 Pro, you can turn "cloaking" on to mask your referrer. It's important to note that, our definition of cloaking is no longer the same as what most people in the industry call cloaking. We plan to rename this feature in the future, since in general we do no endorse cloaking due to its misuse, and have no plans to build that functionality into our software.

Keyword and Targeting Data Leaks: This is usually leaked with the referrer data if you have descriptive keywords attached to your affiliate link provided by the network. By only sending a numeric subid as a proxy for the real keywords and targeting data, you can still have the data you need to optimize without leaking data to the network or advertiser.

Spy and Competitive Intelligence Tools: These are much harder to prevent data leakage to since the ability to block the scraping of your ad creatives are usually out of your control. There are methods for reducing your foot print here, however it's something we reserve for our private consulting clients and high end mastermind members.

Visitor Data Leaks: Every person you send over to an advertiser is data that's being shared with the offer owner. This is totally unavoidable if you are an affiliate, since it's part of the "cost" of doing business. However with the rise in re-marketing and re-targeting, this cost of doing business has become even more expensive. Consider this scenario. You send a targeted visitor to an offer you are promoting, for some reason the user doesn't buy right away and either opens another tab or leaves the site. Because the offer owner is setting retargeting pixels and cookies to everyone that hits their site, they are now able to run ads to the person you sent to get them back to buy. Usually this happens at a much lower cost for the advertiser, and the downside is that this sale is no longer going to be counted as commissions for you. In addition to that, the aggregated sales data from all affiliates promoting the offer can be used by the advertiser to create look alike audiences that would allow them to be much more effective at buying media in-house if they ever had the need to do so. As I said earlier, there's not much you can do about this. You can of course set your own retargeting pixels on your landing pages. However if you are not able to set a burn pixel on the advertiser's conversion page, you are going to be wasting your budget advertising to people who may have already converted. Prosper202's Universal Smart Pixel is one way to piggyback the burn pixel on conversion. However the advertiser must support javascript or iframe pixels.

Affiliate and CPA Networks Also Suffer from Data Leakage.

Due to the way networks operate, one of the biggest leaks of data is the easy identification of the most popular offers on the network and also the affiliates sending the most amounts of traffic to those offers. With this information, it's easy for competing networks to poach top affiliates or advertisers. Additionally other affiliates are able to figure out how the top affiliates are generating leads for those offers.

Sources of Data Leakage for Advertisers or Offer Owners

The same data leakage risks that I described for networks, also apply to advertisers. With the current tools on the market, it's very easy for competing advertisers to find top affiliates and networks sending traffic and replicate everything.

Additionally, there is another huge data leakage issue that many advertisers and offer owners are totally unaware of and should plug up right away.

Advertiser Pixel Data Leakage

These days it is very common for affiliates to get their pixels placed on the conversion pages of an offer. This helps the affiliate to optimize conversions and generate more sales. However when implemented incorrectly, the simple act of placing 3rd party pixels on a conversion page usually means the 3rd party (Affiliate) has full access to all your conversion data. This includes sales not generated by the affiliate.

I'll refrain from fully describing how this works to prevent abuse by affiliates. However, those who know about this, have probably been pulling confidential data from every single conversion you generate without your permission. A very quick fix would be to only use postbacks for triggering 3rd party conversions. If you are an advertiser who must use conversion pixels, we are happy to privately discuss the issue and solutions with you. Simply ping us via our chat system on the bottom right of this page.

Plug Up Your Data Leakage Problem

If you are careless or clueless about the data you are leaking to 3rd parties, expect to one day have that data used against you in a way that will certainly result in reduced revenue. In the worst case, this means, complete devastation of your business.

Rule #2. Good data is a powerful tool and weapon. Be data driven in all your marketing decisions

Wenger EvoGrip S17
Image By D-M Commons

Know your metrics, and use the data to drive all your important decisions. There should be few decisions that you make totally blind with no data to back you up.

How did Amazon know that creating and selling an Aluminum Laptop stand would be profitable? Simple, they have access to all the data. They know exactly how many people searched for the products, they know how many people purchased the products, they knew the number of returns, satisfied customers and more.

With all that data, they had the needed insights to enter the market with their own competitive product and grab a bigger slice of the profits.

Does this look like a model you could replicate as an affiliate? Many of the most successful marketers I know were former affiliates that leveraged the data gathered from running affiliate offers, to figure out exactly how to create and promote their own products while keeping more of the profits.

Rule #3. Good data should be free flowing and never be locked up in silos

Ralls Texas Grain Silos 2010
Image By Leaflet

We are at a point where most marketers depend on multiple marketing tools on a daily basis. The ability to ensure data from one tool is available and useable in another, is now a requirement instead of a "nice to have" option.

This rule ties strongly into Rule #2. To be fully data driven in all your decision making, you are going to need to be able to access and use your data everywhere.

However, if your data is locked up in a silo where it's difficult to extract and use, you will find yourself cutting corners and violating rule #2. This happens because, it's too difficult to move your data from one tool to the next for analysis.

When choosing tools for your marketing stack, make sure that they also provide an easy way to extract and export that data into any other tool or service that may need that data. Likewise, your marketing software should also make it easy to import data to augment or append to your existing data set.

This could be as simple as a CSV file, or as advanced as API endpoints that allow realtime access to any data point you want.

Here's what to do next

Look at your current business and identify and log all situations where you are in violation of the 3 unbreakable rules of data.

Next to each instance, figure out if this is something that can be avoided or not. If not, list all the contingency systems you must put in place to protect your revenue when the worst happens. For example, if you are an Amazon seller, there's no real way to prevent them from seeing all your business data. However the contingency plan for this is to realize Amazon is just a channel. So, diversifying and ensuring they are not the source of the majority of your sales becomes vital. By doing this, the amount of data they get about your entire operation is reduced. Additionally, your business becomes much more stable, because your entire fate is not in the hands of Amazon.

Once you've plugged the holes, we can now focus on improving your data acquisition and monetization efforts. We'll cover that in an upcoming lesson.

Need some help? If you generate more than $1000 a day in revenue, click the chat box below to find out more about our invite only mastermind where we provide hands-on assistance and more proprietary revenue increasing tactics and business preservation strategies and systems that we'd rather not shared in public blog posts.

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