By Dennis Ellis
Consider George Seraut's meticulous pointillism paintings: He would add a dot at a time, but only in aggregate would a portrait come together. For the customer-obsessed marketer, each dot is like a touchpoint of data — valuable, but only when put together with other points to form the true picture of a consumer. Pointillism combines art and science to create a meaningful work, and so does delivering customer-centric experiences.
But recent moves within the industry have left marketers' portraits of consumers dangerously close to the turpentine. With the elimination of third-party cookies, the implementation of Apple's AppTrackingTransparency (ATT) framework, and the likely removal of IP addresses and other device-based identifiers, brands risk being left with a blurred picture of the market. This data deprecation is real, and it is making walled gardens even more attractive, given their promise of addressability. Meanwhile, marketers must grapple with new strategies for the open web and other channels.
Other factors currently affecting marketers include:
- More customer interaction points, which leads to a greater amount of fragmented data and a less unified brand experience at a time when consumer expectations are on the rise
- The necessity for a global brand presence, which adds complexity to finding identity and addressability solutions that can scale data strategies across any geography
- Cloud warehouses, data connectivity, and federated technologies, which can limit or eliminate the need for personal data movement
- The arrival of real enterprise digital transformation with newer and better technology for powering a cross-channel strategy
It is certainly a challenging (yet exciting) time for marketers as they enter this renaissance of identity and addressability. This is why first-party data has become more important than ever.
Third-party data used to be "good enough" — it was relatively inexpensive, easily accessible, and didn't require building an infrastructure and strategy for acquisition. Now, to provide the experiences consumers expect, marketers must better understand who buyers are and how they can be served beyond demographics.
First-party data is an organization's competitive advantage and differentiator. However, to put it to good use, marketers need to have better control over their customer identity so they can build strategies around it. Owning a data strategy allows for a single foundation on which marketers can build the view they need, and from which they can execute campaigns while maintaining consumer privacy.
Overcoming Challenges to Building an Identity Strategy
Having a consistent and intentional data strategy isn't easy. Marketers will face three key challenges along the way:
- Identity inaccuracy and fragmentation. Identity and identifiers appear in many different channels and formats, causing a fragmented view of the consumer that leads to the creation of inaccurate segments and imprecise measurement. Breaking down silos is critical to reducing conflicts and creating a more complete, true view of consumers across an organization.
- Ecosystem latency. Data has to flow through specific steps and parties before it can reach its destination, leading to risk, latency, and drop off. This can be solved with the proper infrastructure to quickly leverage partner tools for persistence and speed.
- Security and privacy. Ensure data is used safely, and that data owners can maintain control while meeting privacy gold standards. This requires consent-based and authentication mechanisms, improved consumer transparency, use-case-based knowledge, and appropriate controls over data movement and encryption.
For marketers, defining and executing on their data strategy unlocks an incredible opportunity to build deeper and longer-lasting relationships with consumers. The through line for any relationship, of course, is knowledge and recall; the more marketers can understand their customers, the better they can communicate. The better brands communicate, the more opportunity marketers will have to deepen and strengthen the brand-customer relationship.
Three Keys to the Future of Identity
Marketers who are evaluating solutions to build and maintain their own customer identity should take into consideration these three fundamental components:
- Record creation. Leverage interoperable solutions that complement existing technology investments and enable first-party identity as the base of the data foundation. To do it, marketers will need first-party data resolution to enable the creation of brand-owned customer views.
- Record enrichment. Leverage collaborative second-party and best-in-class third-party graphs and attributes to enhance customer views and solidify customer intelligence. To do it, marketers will need flexibility to configure the brand's graph and enhance it with second- and third-party insights.
- Translation. A strong identity framework is like the Rosetta Stone for a brand's data. It allows seamless integration across a technology stack and any number of marketing activation and measurement partners. To do it, marketers will need translation that is fast, secure, and interoperable across all channels where the customer is engaged.
By knowing the consumer, building on that knowledge over time, and communicating clearly via the right channels, a marketer continues to add dots to their portraits, bringing into clarity details that might otherwise go unnoticed.
Entering the Renaissance of Personalized Experiences
Marketers are currently inundated with solutions for a post-cookie world, and the fact is more than one is needed. There's no silver bullet for the end of the cookie, diminishing Apple's ID for ads, or other common identifiers. For marketers who want to maximize reach and return, authenticated people-based buying is the gold standard and should remain at the very top of the tactic list because authenticated audiences are the people a marketer has a relationship with, and those are the relationships they should want to continue to foster. Doing so can be supplemented with cohort-based or contextual advertising for unauthenticated inventory.
Campaigns using authenticated people-based buying are already performing better, can increase reach on Safari and Firefox, and can ensure marketers are set up for future success. In fact, in a campaign with Goodway Group and Index Exchange, a national retail client saw three times higher reach when transacting on a people-based identifier through private marketplace buys compared to third-party cookies, according to internal LiveRamp data. When Fitbit ran a similar A/B test, it doubled its return-on-ad spend (ROAS), decreased cost-per-page view by 34 percent, and increased average order-value by 13 percent.
A new Forrester Consulting Total Economic Impact study, commissioned by LiveRamp, found advertisers who use an authenticated traffic solution in place of third-party cookies can achieve 343 percent ROI over three years, with payback within six months of initial investment. Additionally, these businesses achieved $2.4 million in increased marketing budget efficiency, $1.4 million in incremental ROAS from people-based, cookieless advertising, and nearly $1 million in cost-avoidance and other savings.
There's no stopping the shift away from third-party data toward first-party audience data. While device-based targeting gets harder, there's no denying that people-based messaging is better and more effective. The question is, how long will marketers hold on to the past knowing that a renaissance has already begun?
About Author: Dennis Ellis is the VP of product and general manager of identity infrastructure at LiveRamp, a partner in the ANA Thought Leadership Program.