Demystifying Customer Identity

Customer Identity at the Forefront

What is your customer identity strategy?

While often situated in different parts of organizations, both marketers and advertisers encountered more shared challenges than one could imagine over the past few years: an explosion of new channels, technology and government regulations popping up left and right. One of the most crucial shared experiences by both teams: an identity crisis (and no, I’m not talking about Twitter’s identity crisis).

In both advertising and marketing, identity is used to enhance personalization, target specific users and reduce wasteful spending.

However, the identities available for advertisers and marketers are drastically different. And the convergence of AdTech and MarTech we are witnessing is only adding complexity and confusion to the conversation.

When discussing identity strategy, are we referring to identity for advertising or for marketing? Are we discussing identity for Facebook or for Email? Are we addressing identity for web personalization (real-time) or for a newsletter (batch)? Are we considering identity for the first user interaction with your brand or for a long-time customer? I could keep going, there are many angles to consider when engaging in an identity conversation.

Demystifying Customer Identity

To demystify identity, let’s simplify and focus on two views today: identity for advertising and identity for marketing.

Customer Identity for Advertising

Why is Customer Identity Important?

At first advertising was simple. Then it wasn’t. It became more complex with the addition of numerous pieces of technology, such as DMPs, DSPs, SSPs, and others. These technologies communicated through a common currency known as third-party cookies (identity!), which served as the backbone of advertising for a long time. However, this approach was not universal, especially as new channels emerged, like mobile and connected TV.

In the anonymous world, devices are at the center of the conversations. People use multiple devices, and the same device may be used by different individuals. Who hasn’t been worried about looking for engagement rings on an iPad shared by the household, only to find out hours later that the girlfriend was served ads for jewelry on her iPhone (yes, devices have been connected, and the wrong person was targeted…)?

What is Happening with Identity?

Some have referred to this situation as the “cookiepocalypse,” but it extends beyond just third-party cookies. Tech and privacy regulations are on the rise — and here to stay.

For instance, IDFA is no longer accessible without a user consent (around 73% loss). Major browsers like Safari and Firefox have made third-party cookies inaccessible, and Chrome is set to do the same starting early 2024. IP Address? Well, it’s not enough in itself to identify an individual. Vendors may use IP addresses alongside other data in a practice known as fingerprinting. Apple and Google are also taking action against fingerprinting techniques.

What’s Next for Identity?

The safest identity for advertising and anonymous users is going to be a first-party cookie, deployed by a brand on its own properties. However, not all first-party tag providers are equal, and the lifespan of these cookies can differ based on their deployment technique on a site.

Some adtech vendors are also trying to capitalize from all these changes by promoting their own alternative identity solution. Outside of Unified ID 2.0 created by The Trade Desk, all the alternatives could be qualified as closed solutions. Vendors built a black box ID graph using their data (most being third party data). A brand or publisher can access it — e.g. send their own signals to match against the vendor data — for a cost at the discretion of each vendor.

Examples of these identity solutions include the Fabrick ID from Neustar and the RampID from LiveRamp.
Exploring these identities could be beneficial for brands looking to increase scale and reach, but it will require education to navigate the options. Some of these ID graphs are built via deterministic links, typically hashed PII, while others use probabilistic links (fingerprinting?! ????).

In any case, most brands have already rejected their DMP from their tech stack.

Customer Identity Strategy for Advertising

As an advertiser, focusing on your first-party data strategy, which includes the use of first-party IDs, is crucial. This involves generating an ID value when a new user visits your digital property and linking that value to PII once the user authenticates.

Advertisers mostly relying on Walled Gardens and direct buy with publishers might not require to adopt a cookieless ID (vendor alternative to 3rd-party cookies). However, if scaling in programmatic and expanding reach is critical, evaluating these solutions may be necessary.

As a publisher, the strength of your network and first-party data set will determine your move. Some major publishers are rejecting cookieless IDs and instead promoting their own ID graph.

As an agency, you must support brands with varying maturity levels, meaning some may need to integrate with identity providers while others can skip this part. Adopting interoperable technology, with an agnostic approach to identity, will go a long way to enable a future-proof identity strategy.

Customer Identity for Marketing

Why is Customer Identity Important?

Marketers should have an advantage to advertisers: they have collected first-party data PII at the time of conversion or even earlier.

However, here lies the challenge: intentionally (to benefit from a one time offer) or inadvertently (due to typos while filling in forms), a user might have registered multiple times, possibly across multiple systems. This results in having more records than actual customers in your database(s). Obtaining a unified profile for the organization is crucial to improving the customer experience and customer satisfaction.

What is Happening With Identity?

There are two main developments: composable architecture and privacy (once again).

Resolving identities to build a customer 360 profiles is not a new concept, but the approach to it has evolved. MDM technology is still used to deduplicate records in enterprise and regulated industries where identity accuracy is paramount. Customer Data Platforms (CDPs) provided a lightweight solution for businesses who wanted help with their identity challenges for customer experience (CX) use cases without having the teams or budget to spend in a full MDM deployment.

With the advent of composable architecture, organizations that have centralized their customer data in a cloud data warehouse are now building their customer 360 directly within that system. This approach allows them to govern customer data from a single location, avoiding the need to copy data into separate applications for identity resolution.

Regarding privacy, identities used by marketers may seem “safe.” However, considering recent updates from Apple — you might have heard of their Privacy Relay — users can now obfuscate their real email addresses.

What’s Next for Identity?

Identity-as-a-service will soon become the norm. AWS recently announced their identity product and we expect other vendors to provide similar services in the future. Identity resolution capabilities will become a commodity for organizations to leverage with their data.

Customer 360 projects will never be complete, they are a continuous journey. We recommend organizations to get started today if they haven’t, but more importantly, they should not hold back CX initiatives until the customer 360 project “feels” complete. Customer data won’t be valuable until it’s put into action, and marketers need to act now.

Customer Identity Strategy for Marketing

Each organization should have one unique identifier representing a client. The definition of a client can vary. Some organizations choose to use a user-defined value as a unique ID, such as an email address. However, the risk here is that in today’s world, people might have multiple email addresses, and they might even register on devices using a phone number. The use of a persistent, company-defined identifier will often be more effective.

The resolution of identities should be done while respecting privacy regulations and user preferences, as these regulations will only become more stringent over time.

Lastly, to circumvent the phase-out of third-party cookies, organizations are looking to authenticate users sooner, through self-authentication (e.g., requesting PII such as an email address). These practices will only be successful if there is a clear value exchange. Users are now aware of the value of their data, and they won’t easily give up their email address to any brand. Prove your value, gain their consent.

Don’t Let a Customer Identity Crisis Paralyze Your Business

When starting an identity conversation internally, with a partner, or a vendor, make sure to begin with a clear understanding and alignment on the specific use case(s) you want to address. Confusion is a recipe for disaster.

Remember that while identity is important, it is just one piece of the puzzle. If you get fixated on identity discussions, decisions, and project executions, you will miss out on valuable business opportunities. Ensure that you leverage the value of the data collected early and frequently; don’t let it sit idle and turn into a cost center rather than a revenue generation machine.

At ActionIQ, we offer a comprehensive identity framework to assist you in resolving identity challenges for various customer experience (CX) use cases. Whether you aim to enhance addressability for advertising, reduce ad spend waste, or deduplicate profiles to prevent fraud in your loyalty and membership programs, our solution can help you achieve your goals.

Learn more about ActionIQ’s IdentityEdge, IdentityPlus and IdentityConnect solutions, and reach out to our experts.