The media wants to paint these deals with a doom-and-gloom lens. As if some millennial gives a rip that Google is examining their purchase data to help advertisers better understand conversion metrics. Give us a break.
The marrying of data between Google and Mastercard is a good thing.
First, we’re not at all surprised this torch was picked up by Mastercard. Several readers are probably asking why Visa wasn’t involved since they see about 60% of card volume pass through their network. The reality is that Visa is functionally the world’s largest law firm. In trying to protect their dominant position Visa says no to just about everything they can. Mastercard, on the other hand, created Mastercard Advisors, a separate group solely dedicated to data tools and products. This is why innovation often comes from the fringes and not market leaders.
Second, we’re thinking about what this means for Google’s earlier efforts and partnerships with merchant acquirers. Last year it leaked that Google was working with processors to acquire visibility into 70% of offline card behavior. Does this Mastercard deal augment or replace their existing data set? We think of an answer in a few different ways.
- Whatever entity is closer to the customer’s banking records has better customer (PII – personally identifiable information) data. There’s no reason issuing banks would give their PII data to acquirers over the networks.
- Card networks (Visa, Mastercard, etc) see all the stores where the customer spends money. The acquirers (First Data, Worldpay, etc) only see transaction data for the stores where they do the acquiring. The card networks therefore see a more complete customer picture.
- Card networks see a larger volume of data. While it’s true that First Data processes 45% of US transactions, a lot of this comes via a hodgepodge of partnerships where it’s not exactly clear where the data goes.
- Ever heard any messaging from merchant acquirers that had anything to do with investing in innovation? Or is it always about increasing rates and avoiding getting caught with their hands in the cookie jar? Acquirers have always had a singular focus, and innovation has never been a part of it. Which is why they’ll be caught flat-footed one of these days.
We think Google’s partnership with Mastercard is the first step towards working around the stagnating processors.
Third, note that nobody gets item-level purchase data. That’s important since 75% of ad spend comes from suppliers, not retailers. Go look at the margins of Walmart and compare them to that of Nike. Guess which one can afford to spend more on marketing?
The problem for Google is that the card networks don’t get SKU (item level) data… in fact only one provider does: the point of sale. This is why POS providers are the key to the brick and mortar DSP model. Unfortunately most POS companies are either ignorant, or believe they can build this entire construct themselves (even though not one could tell you the quantity and quality of data needed to make the model work). Ignorance is bliss, right?
At least Google is trying to prove the ROI of its offerings. That’s a positive for advertisers everywhere. POS companies should take a cue and learn that partnerships can deliver more good than harm.
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