How to Build ROI Into Your Identity Provider Relationship

May 20, 2020

How much value you get from identity resolution depends on how you structure your relationship.

Like many business initiatives, identity resolution isn’t just a data practice — it’s an investment. When you pay for the solutions and services that your identity provider offers, you’re looking for the highest possible returns. 

Most marketing data professionals would agree with the identity-as-investment framework. But what’s surprising is that many identity resolution customers end up stuck with less-than-favorable terms. That’s unfortunate, as the returns you’ll get out of any investment — including  identity resolution — are determined largely by what you’ve already agreed to pay for.

In other words: your identity ROI begins with the way you structure your provider relationship. With that in mind, below are three areas where you can gain the most efficiency from your provider arrangements — and are cause for concern if they’re not right:

Are You Overpaying for Your Data? When you pay for identity services, a key component of what you’re buying is a number of identifiers tied to individuals or households. How much of that identifying data you’ll need depends on your goals. For just one example: to expand your reach within an audience, you’ll need a large scale of identifiers that are connected to that audience. If your goal is measurement, by contrast, you may only require enough data to be statistically significant — which could be a much smaller amount. 

But while your data needs may vary, many identity resolution terms are structured based on average data usage — which may not be the same as your data usage. A common case is minimums: a provider may stipulate that they’ll only work with you if you purchase a minimum amount of data, linkages, or other services — regardless of what you actually require. Even if your use case calls for a few million records, you may still be on the hook to pay for hundreds of millions of records. What the provider is asking you to buy may be applicable for other use cases — but not for yours. This means you’re overpaying.

Tip: To get the value you need from your provider, decide on the data volume you’ll need — and be sure you’re only obligated to pay for that target volume, and not more.

Match Rates Matter In a nutshell, identity services work as follows. You share individual identifiers — like email addresses — with an identity provider. The provider, in turn, matches those records to other identifiers: for instance, they might find cookies that match those email addresses.

In an ideal world, the identity provider would be able to link 100% of your records to the ones you’re hoping to match to. In reality, the match rate is typically far lower — across identity providers, match rates are typically around 30%- 60% (although the data science across the industry is getting more precise all the time).

To recap: You hand the identity resolution company a certain number of records for them to match. The company takes those records and matches a fraction of those —  but not all of them. Given that arrangement, what should you pay for: The volume of initial records, or the matched results that the identity company can actually deliver— and that you can use? 

The answer to this question will vary across billing structures — and could present a problem for you. If you’re paying by initial volume, you’re effectively paying for work you’ve asked the identity company to do — but they haven’t delivered on. That’s why you should push to pay based on match rate — only paying for the records that were matched.

Tip: Push to pay based on match rate and accuracy, not on volume.

Are You Locked Into Timing? Aside from how much data you’re using — and are able to use — another key factor in the value of your identity is the contract duration. Some identity arrangements require a 12 or even 18 month commitment (and even commitments as long as five years are not unheard of). Other providers allow for far more flexible timing.

If an arrangement with a vendor is too long, it takes away the control and flexibility you need for success. Long-term commitments mean you don’t have the opportunity to test the waters, and also prevent you from walking away if you are not getting what you need. They also prevent you from changing course if your priorities shift — for instance, if you began your identity engagement with a reach use case, but now need to prioritize measurement. And finally, if you’re a highly seasonal business, you may only need identity services around peak times — when you’re engaged with a critical volume of customers that you can nurture the rest of the year. 

Whether it’s short-, long-, or interim-term, it’s critical to set up deal timing that reflects your ongoing and dynamic business needs — whatever they are. Locked-in “marriages” don’t allow for that.

Tip: When it comes to contract timing, be sure you consider the leeway you need to stay nimble. Push for the timing that works best for you.

These three parameters – paying only for the data you need, paying for matched results instead of initial volume, and timing commitments that make sense for you — are crucial to your identity ROl. That’s why you should evaluate any identity engagement with these key factors in mind. After all, your return on identity is determined by the power of the platform, and by the terms of the deal. 


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