The Case for Federated Identity in Acquisition Marketing

The Case for Federated Identity in Acquisition Marketing

The only certainty within digital advertising is uncertainty — the reasons why are clear. Across governmental regulation, consumer preference, web browser-based limitations, etc.; what would be viable now will almost certainly not be the case over the next two, five or 10 years. The solution? Embracing uncertainty and formulating solutions that deliver on the technical agility in being able to adapt to both new standards as well as emerging identity spaces — enter federated identity.

Why the Move Toward Federated Identity?

Federated identity is a model that gives businesses an agnostic approach with flexibility to maneuver across various identity spaces in the market. The net effect being to minimize risk through diversification and to maximize reach.

In this piece, we’ll explore where the identity market is moving and why brands need to embrace federated identity to avoid lock-in and help their identity strategy thrive — no matter the change.

Identity Strategy as Currency

In navigating the myriad of options within the identity landscape, you should keep 3 primary components in mind:

  1. The ID type that is used as a means to activate profile-level data – in other words this is the currency of transaction
  2. The identity graph that is the backbone of that ID type
  3. The technical means of activating profile-level data via that ID within paid media channels

For example, LiveRamp’s primary activation ID at this point in time is the RampID. The RampID is substantiated by an identity graph that is built and managed by LiveRamp (via its ATS network). The means of activating the RampID controlled (with some exceptions) by LiveRamp via its Connect platform. So in this case, both the currency as well as the means transacting on that currency is all controlled by one entity. We would therefore define this as a single ID-based activation platform.

Another example is the UID2 (Unified ID 2.0), built and managed by The Trade Desk. The UID2 is a more interoperable currency, where the means of transaction of that currency can take different technical forms across several different types of platforms.

The last example I’ll give is an ID currency that is proprietary to an established publisher. The Meta CAPI (Conversion API) ID is very predominant. This is a currency that is connected to Meta’s proprietary user-based identity graph, as a means to transact with Meta across profile-based activation and measurement use-cases. Meta does provide the technical means for brands to synchronize with the CAPI ID, wherein audience and activation workflows can occur across various platforms outside of Meta.

How Locked-In Identity Solutions Create Risks for Brands

We see lots of negative implications and risks when a brand locks itself to a single ID space — where all of their first-party data is translating to that one currency, and where any activation or measurement function must occur within the technology owned by said currency controller. These ramifications move across cost, control, future-proofing, reach and activation functionality.

The Hostage Customer

When all of your first-party data is transformed to that one identity currency, as the old adage goes – you are no longer a customer, you are a hostage.

You are fully controlled and leveraged by that vendor; which very high barriers set forth in terms of shopping the market and cost negotiation. Between onboarding and/or ‘records under management’ fees, enterprise-level brands can easily find themselves being taxed $800k-$1.5M and upwards per year.

Transparency and Control

With solutions like LiveRamp, an additional risk for brands is the lack of transparency relative to the matching of a RampID to a person-level profile that would come from a brand. For instance, understanding if a unique profile was truly recognized and matched with a RampID, or was not recognized but a RampID was assigned anyways and then placed in a sandbox awaiting for additional signals and/or an authentication event). There is very little understanding of this process; and even more importantly a lack of trust in the matching process and resulting match rate performance numbers that are reported back to a customer.

Another issue here is understanding and insight of one’s customers, if such data is going to be obfuscated and operational from within a single provider. It’s an obvious impediment in being able to advance one’s understanding, as it is to scale action related to such understanding.

Siloed and Inefficient Activation

You are either a data services provider, or you’re a technology platform. You cannot do both equally as well. The activation functionalities that are forced upon the hostage customer are skinny at best, and nowhere near the functionality that comes with best-in-class tech like ActionIQ. This includes complex audience segmentation, journey orchestration and multi-channel activation.

With the importance of a first-party based marketing approach in our post third-party cookie world, it is unacceptable for an enterprise brand to disconnect audience and activation workflows across owned and paid media; hampered in its ability to optimize customer experience and messaging across the areas where consumers interact with your brand.

How Federated Identity Gives Critical Flexibility to Brands

How Federated Identity Gives Critical Flexibility to Brands

Interoperable Across ID Spaces

Brands need to be able to interoperate across ID spaces relative to the strengths and weaknesses of a particular identity solution. There will be constant variances in these outcomes, depending on the brands category, its media mix, its technology stack, its business objectives, its defined marketing use cases and campaigns, future fluctuations in the market, etc.

A federated identity (aka interoperable) approach provides the foundation of technical agility and commercial leverage relative to:

  1. How and where brands activate their first-party data across digital media channels
  2. Control as to how they can track, understand and delivery on personalized experiences across all channels within a full customer journey
  3. Identity states relative to customer journey, from prospects, to web visitors to known customers
  4. Future-proofing that enables testing, iteration, and deployment of various ID spaces relative to ongoing market fluctuations
  5. Different categories of ID spaces across walled gardens (ie Meta CAPI), identity tokens (ie UID2) as well as identity service providers such as Neustar, Merkle and Acxiom

Technical Agility vs. Market Uncertainty

There are a myriad of identity currencies that brands should be able to readily connect with and leverage, as a means to maximize its reach within paid media. What is a certainty, is that there will be ongoing uncertainty in the market, and there will be winners and losers that will come and go over the next two to three years and beyond. It is critical for brands to maintain the technical agility to maneuver across this landscape.

Optimize Both Reach and Cost

With increasing optionality as to how brands can choose to activate their first-party data within paid media channels, comes the opportunity for brands to realize substantial savings that are otherwise invested in expensive onboarding and/or ‘records under management’ fees.

Embrace Choice and Flexibility with Federated Identity

Brands that embrace federated identity with choice and flexibility will see value in optimized reach, match rate performance and cost — by providing a solution that is grounded in the technical agility to interoperate across multiple ID spaces.

With interoperability across multiple ID spaces, direct connectors into paid media channels and tag infrastructure, brands like HP, Sony, Dell and Doordash use ActionIQ to support their identity strategy. Talk to us to learn more.

Zachary Van Doren
Zachary Van Doren
Senior Director of Partnerships
Marketing technology and data leader with 20+ years' experience helping enterprise brands in their digital transformation efforts, working across marketing, data and technology teams. Prior experience includes the founding and leadership of CMO Labs, one of the industry’s first CDP consulting firms.
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