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In 2022 the digital advertising industry will be faced with further depreciation of third-party identifiers. Brands, agencies, publishers and technology companies will start to scramble to implement infrastructure to support connectivity of consented data. As the need for data connectivity starts to accelerate, a new technology stack will start to emerge. This “data connectivity infrastructure” stack will become a key investment category and we can expect to see major consolidation (read: M&A and key partnerships) in 2022 as a result.
Components of the data connectivity infrastructure stack
There are currently three major types of infrastructure for data connectivity:
- CDPs and DMPs — the software to manage audience data
- Data clean rooms and data sanctuaries — the software to safely port the data
- Identity technology — tools that marry and enrich piecemeal people data across silos and partners so that the data used is complete and correct.
In 2021, we first started to see these solutions being packaged together, which makes sense because they are all part of the same “data connectivity” value chain. We’re also already seeing a consolidation, or at least a partnership trend. LiveRamp already offers all three solutions: identity, Safe Haven (clean room) and Data Marketplace (DMP/CDP). It’s not a perfect trifecta by any means, but the three-in-one packaging makes it highly competitive with the point solutions and is bound to trigger consolidation from the other infrastructure competitors. Meanwhile clean room InfoSum has launched InfoSum Bridge to link with identity providers.
In 2022 the larger players like Adobe, Oracle, and Salesforce will start to stack the deck in their favor by eating up companies to support their ability to power end-to-end data connectivity for first-party data. Eventually, these partnerships will lead to M&A. While the timeline is contingent on when Google and Apple finally pull the plug on accelerating the need for first-party cookies, the change is happening already and is bound to come to a head in 2022.
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M&A may dictate changes to the stack
For marketers, this means that the point solution data connectivity products they’re using today (currently offered by various providers) are likely to become features of a consolidated product tomorrow. Marketers will need to make a decision of whether to stick with many partners or consolidate. Some brands will continue to work with multiple point solutions because they want to create their own customized stack, and consolidation will take some of that flexibility away. Other brands may ultimately want a full suite, but will want to have more say in which suite they adopt and when.
There certainly are pros to accepting wherever consolidated offering emerges. A larger suite solution may offer better customer data sharing — for example an identifier like a loyalty ID that can be used across the components of the solution. They may offer higher data sharing frequency as it’s ultimately going to be the favored system to build out real time updates vs. batch updates. This can be a major game changer for many brands who need real time data for dynamic customer experiences, for example. And the larger solution is likely going to offer a higher level of service and handholding just based on the complexity of their offering and the likely larger size of their typical customer.
The cons to accepting a full suite offering are mostly for brands with their own complex data needs that require a high level of flexibility. Some big tech companies build for their average customer, providing off-the-shelf options with little customization available. While other companies like Adobe and Salesforce have great resources in place for custom builds and services, they would of course still be built out of their own suite. Brands need to determine what level of customization, independence, and flexibility they need and proceed with the understanding that in the future they may need to find a new partner if M&A changes things.
Customers building their own stacks and using pieces of the consolidated offerings as point solutions will probably get the “standard package.” This equates to standard data integration with other point solutions, batch updates, and a lot less hand-holding. At that point, data interoperability becomes a problem — an issue we need to solve as an industry. For example, if a brand is using LiveRamp for identity today and Salesforce’s CDP, everything plays well together today. But if Salesforce gains its own identity layer, will it have the same incentive to play well with LiveRamp? It will likely build out better functionality for its own suite first.
When an independent player is bought by a larger tech company, it often adopts the product and service approach of that larger company. This might mean that customization becomes impossible, or that there is little support for a specific vertical, or little experience with a certain element of the business such as loyalty data or non-programmatic marketing needs.
Brands need to know what matters most
While the ultimate endgame is impossible to forecast, it’s clear that major change is on the horizon. Brands of all sizes and levels of data maturity need to do some scenario planning and create a prioritized list of what matters most to them when it comes to identity. These “must haves” will make it easier to make a decision in case one of their partners does get acquired, or to integrate deeply with a specific partner.
The CIO and CMO should be aligned on their priorities, of course, but they also should work together to discuss the implications of different moves — for example, estimating the cost of switching a major component of their product, or estimating the reduction in ROI if dynamic advertising is no longer possible. All of these different what-if scenarios can help the entire team prepare to make smart decisions more quickly, before they are too entrenched with an approach that may or may not work in the future.
Nancy Marzouk is CEO and Founder of MediaWallah.
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