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Identity Resolution: The Future Of Audience Strategy

Updated: Jun 20, 2023

Well, we lied.


Yes, we are the first to admit when we are wrong. The title of this blog, while catchy, is incorrect. It should, rather, read as "Identity Resolution: The Absolute Present, Already On Fire, Super Important Audience Strategy Of Today".


Because that is what it is. With the various paradigm shifts taking place in our industry today, having technological knowledge of the tools that allow digital agencies and brands carry out effective Identity Resolution is easily the biggest make-it-or-break-it solution that has been storming our industry in recent years.


We at MadTech are hyper when it comes to making seemingly complex problems sound simpler and easier to digest, so read on to learn the most important things that a digital agency should keep in mind when it comes to Identity Resolution.


So what is Identity Resolution (IR), then?

As the digital advertising industry continues to evolve, identity resolution has become an increasingly important aspect of our work. Simply put, identity resolution is the process of connecting a user's online behaviour and interactions with a unique identity, allowing for more accurate targeting and measurement in advertising campaigns.


This does not end with just cookies or device IDs (which is how the industry functions today). This will HAVE to include other form of identifiers such as Email IDs, Phone Numbers, and information that is NOT just online, such as CRM data, offline purchase information and more.


The reason for this becoming such an important part of today's Digital landscape is.. (yep you are about to hear yet another unbelievably tossed around phrase).. The Death Of the 3rd Party Cookie. This doomsday event that we have all been awaiting with bated breath, is meant to occur sometime next year (2024) according to Google. That gives all of us about a year to be better prepared, at whatever capacity, to speak, function, operate or consult in the space of IR and technologies that are relevant to IR, such as the Consumer Data Platform.



 

Identity Resolution Is Key To Understanding Your Customers


With each new touchpoint in the customer journey, a new silo of data is created—unless companies invest in the data foundation underpinning those tools. With Consumer Data Platforms, you are able to collect customer data from various sources, standardise it, and create comprehensive customer profiles.


The Multi-Faceted Utilities Of A CDP

Hmm. Silos. What's that?

Great question.



Passes beer to friend, rolls up sleeves.


Let's begin.


To understand Silos, and how that is cancerous to any Industry, much more for the Digital Advertising industry, we first need to understand the fragmented technologies and the players that exist in our industry. So here goes:


Programmatic Advertising’s Complex Web of Sellers, Buyers, and Everything in Between


Publishers: This broad term is used to loosely refer to companies that sell programmatic ad inventory. This includes TV networks, social media platforms, retailers, connected TV (CTV) content aggregators, smart TV manufacturers, video and audio streaming services, game and mobile app developers, and news organisations.


Marketers: Companies that buy programmatic ads fit this description. In addition to what we think of as leading brand advertisers, the list also includes publishers that promote their products in the programmatic market, blurring the line between buyers and sellers


Agencies: In addition to servicing brand marketers in the traditional agency-client relationship, these companies are emerging as important players in helping customers establish programmatic advertising strategies, building and leveraging first-party data, using ID resolution services to segment and target audiences, and providing campaign optimization, measurement, and attribution services, among others.


Retailers: With more retailers deploying media networks, these companies are now major players in the programmatic advertising industry. Not only are large retailers capable of using vast pools of customer data to inform their ad marketplaces, but by nature they can serve ads close to the point of purchase (whether in brick-and-mortar stores or digitally). Retailers are in an ideal position to sell ads across the purchase funnel and gain a keen understanding of everything from consideration to attribution.


Demand Side Platforms: These companies arose from marketers’ need to outsource ad buying in an increasingly complex programmatic marketplace. While the largest DSPs offer managed services, they are also starting to allow clients to run their own campaigns through self-serve dashboards. And more clients are opting for the selfserve approach, according to Advertiser Perceptions’ “Demand Side Platform (DSP) 1H 2021” report. The study also noted an increase in the average number of DSPs used by clients.


SSPs: Publishers use SSPs to manage their ad inventories. In the same way that buyers employ multiple DSPs, publishers will average some 5.8 SSPs in 2022, according to Advertiser Perceptions data cited by Ad Exchanger on February 4, 2022. While that average is below the company’s previous projection of seven SSPs per publisher, there is still a sense in the market that publishers are leaning heavily on these companies to help them optimize their ad inventory in a complicated marketplace.


Exchanges: These companies facilitate real-time bidding transactions between buyers and sellers, typically through DSPs and SSPs. Like almost everything related to ID resolution and programmatic advertising, the pool of players in this category is complex, with considerable spillover into other services on both sides of the transaction. This creates a scenario where partners are often also competitors.


Measurement firms: In the traditional advertising world, buyers relied on a small cluster of providers for campaign metrics. In the programmatic domain, this universe of players has expanded to address the complex needs of marketers, ranging from campaign return on investment (ROI) to optimization to attribution.


Identity solution providers: As noted, the number of companies offering identity services has expanded significantly, reflecting the state of flux in the industry as cookie and mobile ID deprecation play out. The list includes the triopoly companies (Google, Meta, and Amazon), media conglomerates with proprietary identifiers, smart TV-makers, contextual targeting specialists, and pure-play services, according to April 2021 AdExchanger analysis.


"Our ecosystem is just too fragmented. There are too many service providers in the middle, too many tech providers, too many DSPs, too many SSPs. It just doesn't work well for an industry that has been around for 20 years. I think consolidation needs to continue, and that's the only way we can continue to push for better efficiency for marketing dollars" - Kunal Nagpal, Senior Vice President and General Manager, InMobi

The easiest way to understand the chunk of information you just received is that silos are cancerous to our industry because they prevent the sharing of data. And data uniformity is what allows us to create useful products such as Data Lakes (a pool of unified audience information), that helps brands understand every single touchpoint a user makes with regards to that Brand.


⬆️ The above is the Holy Grail of IR. And there are billion dollar companies spending billions of dollars trying to hit this asap.


18-24 Month Trends (Apart from Google's plans)

Our team has done some research into identifying what the industry believes will be the major milestones that we can expect to see in the next 2 years.


Continued industry consolidation, especially among ad tech intermediaries:

This trend will result in a “rich get richer” scenario where vendors with significant scale will absorb competitors and aggregate market share. This will just be the starting point of a wave of such acquisitions.


Intense focus on collecting and harnessing firstparty data:

Companies with access to customer data will double down on making the most of their data sets for audience segmentation, targeting, optimization, measurement, and attribution. We refer to this as a Value-Exchange Toolkit at MadTech Media, a rudimentary approach to making exactly this happen.


Renewed interest in contextual advertising:

In the absence of legacy identifiers, industry players are beginning to reinvigorate their contextual targeting efforts. Forty-two percent of US data leaders surveyed said they would increase spending and emphasis on contextual advertising in 2022, up significantly from 24% in 2021, according to the IAB’s report.


Potential deprecation of IP addresses:

Yes you heard that right.

The EU considers IP addresses to be personally identifiable information (PII), making them subject to privacy regulation. This could be the next frontier in the battle between the ad industry and privacy advocates, and it could have an outsize effect on CTV advertising, which depends on IP addresses as opposed to desktop and mobile device identifiers. “IP addresses are important for Wi-Fi-enabled devices like smart TVs and for cross-device linkages for advanced TV advertising,” said Brian DeCicco, US chief data strategy and analytics officer at GroupM/WPP agency Mindshare. “But they are becoming increasingly unreliable as ISPs look to obfuscate IP [addresses] out of concerns for consumer privacy.


So what do we do, now?

We would recommend that companies in the advertising industry prioritize realigning their businesses for a future without third-party cookies and mobile IDs.


It's important to test out new solutions and strategies to mitigate potential losses that may occur from these changes.


The specific approach each company takes will depend on various factors, such as their size and industry, but it's crucial to assess the impact and plan accordingly. According to the "State of Data Report," 77% of US data leaders surveyed were prepared for the loss of third-party cookies and IDs in 2022, which is a 10% increase from 2021. It's worth noting that preparedness was highest among ad tech and data players, while brands showed the lowest level of preparedness.


Agencies have shown the biggest jump in preparedness, which suggests that clients may be pushing them to better understand the landscape and plan for potential negative outcomes. MadTech strives to consistently be at the forefront of this, and we encourage you to stay ahead of the game and continuously test new solutions and strategies to stay ahead of the curve.


In case this is of interest to you, sign up for a free consultation and let's have a chat!





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