Enterprise identity is becoming a foundational requirement for brands and their partners as marketing and advertising are increasingly data-driven, and as a greater percentage of impressions become addressable and measurable at the individual consumer level. Sensing this, many mar-tech, ad-tech and data companies have reupholstered themselves as providers of identity solutions to take advantage of this new market demand.
Among the first to do this were the onboarders, who staked a claim that because their main business was translating offline identities into online ones, they were the logical choice to handle all a brand’s identity needs in the marketing realm. Who can blame an onboarder trying to evolve in response to shifting client demand?
But semantics matter, and the semantics of calling an onboarder an identity provider distracts—perhaps intentionally—from the reality that onboarding is quickly becoming an obsolete industry function. One that brands and their longtime providers and partners should soon be able to perform for themselves, while also protecting their valuable customer data.
Most of us can remember a time, little more than a decade ago, when onboarding didn’t exist as a line item on the marketer’s budget. According to Winterberry Group, identity resolution spend (including onboarding) is forecast to be $8.2 billion by 2024, which is remarkable when we consider that no other form of media extracts such a “toll” from its users. A look back on the arc of the onboarding industry since its inception provides a healthy perspective on the future trajectory of the category, and why onboarding is destined for the dust bin in the next five years.
This is a development that should make brands optimistic for the future as the toll they pay to onboarders today could be better deployed into productive marketing in the future.
Birth of onboarding and early childhood (2008-2013)
For most of the first decade of the 2000s combining offline and online data was considered a serious taboo. The failed combination of DoubleClick and Abacus served as a cautionary tale to any company who dared to blaze a trail in this direction.
That began to change around 2008/2009. Many users of offline consumer data, such as credit bureaus and social media platforms, were experimenting with and seeing the potential for better business outcomes by combining relatively inexpensive digital media with the precision targeting potential that consumer PII delivered in direct marketing applications. Still, a perceived risk on the part of these companies, they confined most of their efforts to aspiration or the R&D department. Then in 2011, LiveRamp was born as a spin-off of the data company RapLeaf. LiveRamp’s one and only product was onboarding: The enticing ability to take an offline CRM audience and translate it for use in digital media.
Teenage years (2013-2015)
Onboarding worked for marketers. And the risk stigma that had prevented it from existing prior to 2011 didn’t materialize for its users. Soon, LiveRamp’s success and growth spawned a number of onboarding competitors eager to grab their share of this new and growing category.
Publishers were eager to promote and cheerlead for the use of onboarders, as it drove demand from direct-to-consumer marketers who previously shunned digital media for its lack of targetability. Onboarding proved to be a great short-term fix for declining traditional ad spending that supported publishers’ revenue streams.
During this period, onboarders rapidly sought to compete on “match rate” (i.e., their ability to onboard as close to 100% as possible of the customer’s supplied CRM list), the ability to translate to any digital identifier, including MAIDs and IP addresses in addition to cookies and the number of media destinations where the advertiser’s audience could be activated. However, it soon became clear to onboarders that once all their competitors could do most of these things adequately, the category would quickly commoditize. Onboarding would need to grow up into adulthood if it would continue to thrive as a business.
Adulthood and middle age (2015-2018)
Onboarders recognized new use cases and solutions were the only sustainable answer to a commoditizing market for their core service. At the time, the larger onboarders were achieving near ubiquity of integrations with dozens, and even hundreds of media endpoints (i.e., every variation of DSPs, SSPs, social platforms, exchanges, MVPDs, data providers, etc.).
With so many buyers and so many endpoints, the powerful network effects of the onboarding business model began to materialize, and the major players saw that, like an early telephone switchboard, they could introduce use cases and pricing for the movement of data in any direction across and around their network. Soon, they were branding solutions for needs such as “offboarding” and measurement. Future growth would depend on innovation within the onboarders’ “network.”
Prime earning years (2018-2021)
By early 2018, the principal onboarding providers were big and getting bigger each month. Those that had been profitability-challenged by their investments in revenue growth were seeing steady margin improvement. The market saw these businesses as successful fixtures in the industry landscape. LiveRamp, for example, divested its Acxiom Marketing Solutions business and became a standalone public company with a market cap of $3.6 billion on less than $300 million in annual revenue.
As with any established business, the challenge eventually becomes sustaining growth beyond the core business. For onboarders, the growth battleground shifted from match rate and the ubiquity of identifiers and endpoints—the things that had established their network effect—to the new hot button term “identity resolution.”
With customers becoming more sophisticated about audience and measurement accuracy, the conversation about translating offline identity to digital, and vice-versa, needed to shift to how onboarders could accurately resolve the many permutations of a consumer’s identity over time and across different identifiers into one identity key that was both persistent and privacy-safe. The promise of this better version to simple match logic was received well. But the promise would create internal challenges that onboarders would have to address as they aged—accuracy vs. scale—an age-old problem better not discussed or revealed.
Wrinkles and retirement (2021 and beyond)
The onboarders have successfully reupholstered themselves as identity businesses, implying—if not promising—the ability to resolve any form of consumer identity into any other with a high degree of accuracy. But just as the promise of identity resolution is being made, the ability to deliver on that promise is becoming much more difficult. Apple and Google each are significantly changing access to their identifiers, both of which have been foundational to the onboarders’ ability to perform identity resolution for brands and partners. Suddenly, the third-party model of the onboarders-cum-identity providers can no longer ensure brands the ability to perfectly resolve consumer identity inside their proprietary black box.
Simultaneously, brands are rapidly embracing their own need to understand and control first-party identity. They see the evolving privacy landscape of GDPR and CCPA/CPRA and know that they are ultimately accountable for the stewardship of their consumer data. Many brands are realizing for the first time that their consumer data is an extremely valuable corporate asset, perhaps too much so to be entrusted to an external custodian. All this amid the backdrop of cloud technology becoming ubiquitous, enabling brands to perform more work that once took place inside their providers’ networks, inside their own firewall.
Enterprise identity is bigger than onboarding
Onboarders were once the only game in town when it came to translating consumer identity between brands and advertising activation points. The value exchange was clear and worthwhile: pay a fee to enable this translation and open a significant market opportunity between the buyer and seller of advertising. Now, the game has changed to one where brands’ most significant corporate asset—the identity of their consumers across the media and technology landscape—is at stake.
Increasingly, brands are rethinking the level of control and visibility they must retain over the corporate asset that is their customers’ identities. They see the potential to use affordable cloud-based technology to give them control and transparency over this crucial intellectual property. In this environment, whether fair or not, brands and activation partners see any tax on their collaboration with other brands and activation points as a value detractor from their business.
Enterprise identity encapsulates what brands, and their activation partners are trying to achieve in 2022 and beyond: the ability to accurately resolve and control consumer identity transparently inside their own environment, transact on that identity without privacy risk and without being beholden to an external provider “tax” on their interaction with partners.
Onboarders have made an industry out of owning the solution space that brands and their partners now seek to own and control themselves. But they have reupholstered a weakening chair that brands have all sat in for the last decade, and are looking to get out of, rather than rebuild the foundation that supports the entire enterprise. The onboarding business model as we have known it will be retired in the next few years while the new model of enterprise identity steps in.
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As CEO of Adstra, Rick drives the strategy, growth and profitability for Adstra’s industry-leading data and identity products and services. With over two decades in the data-driven marketing industry, Rick is a leading voice in the field of omnichannel marketing and an outspoken advocate for the value of data in the global economy.
