2020 MARKETING IMPERATIVES 1
FOREWORD
Welcome to the 2020 Marketing Imperatives.
Hyper-
Personalization and
the Connected
Customer
Experience
Year after year, this resource for the customer-focused marketing
leader evolves to bring you Merkle’s latest thinking around our core
pursuit: placing people at the heart of the business strategy. Our goal
is to stimulate your thinking toward the future of marketing while
providing actionable ideas that can impact your business in the short
term. Each installment of the Imperatives is designed not to replace,
but to build upon the previous one and, ultimately, to strengthen your
ongoing approach to people-based marketing.
The 2019 imperatives that inspired integration are still very
relevant, as they pertain to the alignment of the customer strategy,
the implementation of the technology stack, and execution of the
customer-based strategy in the market. Marketers are still on the
road to delivering upon the promise of people-based marketing.
But as the marketing landscape and consumer expectations
continue to evolve, it has become clear that we need to do more.
Today’s savvy consumers have much more control than they did
just a few short years ago, largely due to concerns over privacy
and choice. They are exercising control over their own data, the
content they want to consume, the experience platforms they
2 2020 MARKETING IMPERATIVES
prefer to use, and the brands they wish to interact with on a daily
basis. Their exposure is no longer limited to whatever happens to
interrupt their TV programming or which billboards catch their eye
while driving. As marketers, we have to adjust our own mentality to
be “consumer first.” And that’s not just about addressability; it’s
about willfully thinking about the consumer with every decision we
make across the enterprise.
Every CMO’s success will hinge upon achieving that next level of
hyper-personalization and playing a leading role in the direct-to-
consumer revolution. You’ll achieve this by learning how to master
identity, balancing the mix of in-house and outsourced skillsets, and
yes, delivering a total customer experience.
I hope you find this year’s Marketing Imperatives thought-
provoking, and I challenge you to become a champion of the
concepts within it, across your entire organization. As your
customers begin to feel like you understand them with every
distinct interaction, you both will reap the benefits of your
emphasis on the total customer experience.
DAVID
WILLIAMS
Chairman &
CEO Merkle
2020 MARKETING
IMPERATIVES
3
4 2020 MARKETING
IMPERATIVES
CONTENTS
7 EXECUTIVE SUMMARY
11 IMPERATIVE ONE
Deliver the total customer experience
Marketing now is responsible for growth and must
stretch its purview to include ownership of customer
data and the overall customer experience. This can’t
be achieved without a clear connection to all
customer-related business functions: sales, service,
finance, logistics, product, channel etc.
27 IMPERATIVE TWO
Take ownership of identity
Brands have a common vision of right time, place,
person, and message delivered in real time across the
customer journey, while also providing more
effective, hyper-personalized service and commerce.
This vision is only as good as a company’s ability to
know who it is really talking to at every touchpoint.
41 IMPERATIVE THREE
Enable agility through strategic sourcing
Calibrating the marketing resource mix is no longer solely
about cost. It is also driven by more strategic priorities,
including agility, accountability, and innovation. This is
not an either/or decision between bringing everything in-
house or relying exclusively on external partners. There is a
continuum of possible combinations across function,
source, and location.
54 CONCLUSION
6 2020 MARKETING
IMPERATIVES
EXECUTIV
E
SUMMARY
The identity revolution
Standing at the threshold between two decades,
we find ourselves at a turning point in the way
we approach people-based marketing. The
decade behind us was all about digital; the next
one will be about identity. The equation that
comes to mind as we bring those two powerful
forces together is that digital transformation plus
data transformation equals customer experience
transformation. If you can nail your digital
capabilities and maximize your data assets and
analytic skills, then you can transform into a highly
customer-centric organization, using technology to
enable the personalized experiences that build
strong bonds with customers.
But as marketers, we must wrap our heads around the fact that, in
the world of customer experience transformation, marketing is
really just one piece of it. The total customer experience includes
every interaction the customer has with the brand, from marketing to
sales to service and everything in between. Marketing has
traditionally owned advertising and communications, but we need
to expand the reach of our influence and our skills to inform other
aspects of the customer experience. And the only way to deliver
that total experience is to know the customer.
Forces like the direct-to-consumer business model are taking the
need for personalization to a new level. Netflix, Uber, Dollar Shave
Club, and their ilk have materially changed customer expectations
around the ways they interact and engage with brands. CMOs find
themselves navigating these forces, while at the same time
adjusting to increased privacy concerns, as General Data Protection
Regulation (GDPR) and California Consumer Privacy Act (CCPA)
spark further regulation. The CMO is in the driver’s seat of a major
pivot in the marketing approach that must be carried out across
the entire organization. Hyper-personalization means targeted,
relevant experiences at every encounter, encompassing the brand
as a whole. Consumers consider all of these touchpoints part of the
connected customer experience, and the role of the CMO is
evolving to influence it.
The CMO role evolves
With the transformation of marketing comes the transformation of the
skillset of the CMO. From the 1950s to the early 2000s, CMOs were
all about the brand. Then, with the digital and performance- based
capabilities enabled by digital, they needed to understand technology
and deliver quantifiable results in their programs. Now, they’re taking
the leap to the next stage. Today’s CMO is a business person who
has accountability for revenue and costs to drive overall growth and
profits for the organization. Many CMOs now have a pathway to
become CEOs, which was unheard of in the past, because of the
broader business skillsets required.
The 2020 Marketing Imperatives will help you attack this new
reality, using data, analytics, and technology to enable hyper-
personalization that will drive the total customer experience.
8 2020 MARKETING IMPERATIVES
Deliver the Total Customer Experience
In our always-on, real-time culture, consumers expect their
interactions to be frictionless and relevant. In order to be
successful in that realm, you need to understand them,
anticipate their needs, and use ever more engaging levels
of personalization in the ways you connect with them
across any customer touchpoint.
Take Ownership of Identity
The ability to deliver that experience relies upon your
capacity to master identity and agility in a world where
you’re competing against digitally native brands that have
built their business solely upon the exchange of information
for the products or services they provide. Sure, for most
companies, customer centricity has long been a core
tenet of the marketing function. But this magnitude of
transformation requires a level of hyper-personalization that
surpasses anything we’ve seen in the past. It means that our
relationship with a customer transcends marketing, and it’s
wholly dependent on the concept of identity as enabled by
data, analytics, and technology. It is the fundamental building
block to delivering those experiences that are incredibly
relevant to the consumer and create incredible outcomes for
brands.
Enable Agility Through Strategic Sourcing
Today’s marketer who delivers the customer experience
across marketing, sales, and service needs a vast array of
capabilities and competencies to deliver on that customer
experience. It’s imperative that they determine their optimal
mix or supply chain of resources to support those goals.
Some will be what they hire for directly themselves, some
will be what they imbed from third parties into their
organizations with unique skillsets, some will be done by
agency partners, some onshore, some offshore. Optimal
mix of resources will take a broad supply chain across
those dimensions to be successful.
2020 MARKETING IMPERATIVES 9
IMPERATIVE ONE
DELIVER THE TOTAL
CUSTOMER EXPERIENCE
2020 MARKETING IMPERATIVES 11
deliver the total
customer experience
Understanding the importance of
a specific experience
Managing the customer experience is
one of the hardest things that a
marketer needs to think about in today’s
complex, multi-touchpoint world. In many
cases, the
brand driving the experience either 1) doesn’t
have insight into the customer at the point
of delivering the experience or 2) doesn’t
understand how the customer is making a
decision and where the critical points of the
experience exist.
We find that most marketers today are thinking of customer
experience through the lens of what they send the customer or
what they want the customer to do. This tends to fragment the
experience across channels, touchpoints, and, in many cases,
marketing goals.
Marketers need to start thinking about inbound touchpoints as much
as they do outbound. This means breaking down the internal silos at
an organization and prioritizing the experience of the customer
across your different internal teams. It means aligning
corporate goals and business objectives through a new set of key
performance indicators (KPIs) that are based on building deeper
customer relationships. Simply put, it means pushing your
organization to think about the full customer experience, not just
what you send to them. Making this shift requires focusing on the
value of each interaction with the customer, ensuring differentiation
in every engagement with your brand, product, or service and
creating bonds that stand out among other relationships.
When we start to think in that context, it is helpful to consider the
intersection of the value of a product to the customer, the cost
or utility of the product, and the mindset of the customer when
engaging in the experience.
As an example, think about a consumer at a retail store trying to
decide on a new television purchase. Today’s consumer can obtain
information on the television in real time, while standing next to the
display model and without needing to talk to a store associate. As a
marketer, you must ensure that you’re serving the need of the
consumer during this critical decision-making moment and in the
right place, even though you will likely not be able to track sales
as a direct result of your work, as you can with online purchases.
To complicate it even more, consumers in situations like this have
likely either had a prior experience that is leading to their decision,
or they have been influenced in their mindset by reviews, friends, or
other information online. As a marketer, you need to be thinking
about the needs of your potential customers while they are in the
store, what types of information may be displayed in person, and
what questions they may need help answering. You also have to
consider the experiences that they have come to expect from other
providers. Is your website conducive to product comparisons? Does
the mobile site have a smooth customer experience like Amazon
or Best Buy? Can the key information be found quickly and easily,
while the customer is standing in front of the product? These are all
things that now need to be part of a marketer’s thought process,
centering on the customer and not the short-sighted business goal of
driving sales.
low AMOUNT OF CONTROL high
Anonymous Identified (call center, in-
(., in store) person interaction)
Proxied (owned properties, third-party content)
To evaluate the type of experience in this way, Figure illustrates
a framework to help you visualize how you should approach your
focus areas:
Figure : Determining the Expectation and
Key Touchpoints for the Customer
Experience
LENGTH OF PRODUCT UTILIZATION
Behave in a customer-first manner
The tenet of “customer first,” which makes customer needs a key
pillar of the business focus, is the core strategic agenda for any
organization. Making this shift is not easy, and doing it at the
pace required to preserve customer relevance is even harder. It
often requires a change in mindset, an evolution of capabilities,
and a transformation in how the business behaves, works, and is
measured. This means business dimensions and KPIs must work
in harmony around a clear customer strategy, with unambiguous
measures to ensure that the business can deliver in an increasingly
agile manner.
V
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Figure : Linking
the Customer Value
Chain
CX VALUE
Trust
Relevant
Campaign Value
Marketing
People
Process
Customer Value
Business Value
Although there are many aspects of the capability spectrum that must
come together, as referenced in Figure , defining the total
customer experience is a core building block. The first requirement
for making this happen is the ability to recognize customers across
every interaction, enabled by an underlying identity platform. The
next is the ability to execute more personal experiences in an agile,
collaborative way.
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Define the “total customer experience”
We are witnessing an evolution in customer focus that started way
back with a personal, one-to-one experience where, although
selling was the end objective, interactions were very personal and
oriented toward meeting a customer’s need. The sale, in many
ways, was a by-product of meeting this personal need.
This approach has been replaced by the current era of
personalization, which is often a single-channel scenario and
usually measured not by the customer’s experience, but by the
funnel conversion in that channel. The primary measure of success
is not customer delight, but rather a collection of interaction-led
funnel metrics. In this age, the channel experience has become
personalized, but the customer has become invisible – lost between
device identifiers, cookies, and fragmented elements of personal
customer data.
The experience pendulum is still swinging, and it’s moving from a
focus on specific entities within a channel to the whole customer
experience. It recognizes that the customer experience and
subsequent perception of your brand is defined by the sum total of
all (recent) interactions with you. Customers don’t live in adtech
and marketing tech. They experience every touchpoint, and often
the experiences that are the furthest from the current marketing
focus have the greatest impact on a customer’s perceptions and
willingness to remain committed to a brand.
Delivering a personal experience at scale requires the intelligent
interpretation of many different sets of data, all describing some state
of the customer journey (see Figure ). Data must be available to
teams outside of marketing, including sales and service, to provide
the right experience across those touchpoints. Think about the
previous example of the television purchase. The key drivers in that
decision are product value information, reviews, and
recommendations from other customers and industry review sites.
Those reviews are based on not just the purchasing process, but
One-on-one
PERSONAL – “sell
without selling”
Figure : Evolving Experience Capability
Need
also the customer service, sales support, and the functionality of the
television to achieve the needs of consumers. Every one of those
reviews influences the consumer’s perception of the brand and in
some manner the likelihood to buy or not buy your product.
Personal
Experienc
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Personal
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Sell
Advertising
Tech
Marketing Tech
Sales Tech
Service Tech
Tomorrow
TODA
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Age of
PERSONALIZATION
–
optimize conversion
PERSONAL at
scale – “sell without
selling”
The marketer has the data necessary to inform better exchanges in
each of those areas, but currently is not motivated to provide the
relevant data to the sales, servicing, and product development
efforts that will affect the customer experience in a new way. As we
start to think differently about marketing and customer data, we
need to be developing ways to incentivize data sharing at an
individual level that can improve the overall customer experience
across the entire relationship with the enterprise. With the ever-
evolving regulations about how companies can use consumer data,
marketers need to be asking for more from customers, using new
approaches that drive value to both sides. Customers want better
experiences and are willing to exchange data to get them. What
they don’t want is someone constantly asking for things that don’t
seem to matter. You as a marketer need to decide which information
is critical to both of those value points.
Not all businesses are created equal with respect to data, which is
a by-product of their customer model. Consumer packaged goods
businesses, for example, don’t have the same ability as insurance
companies to track consumer sales. (This is fueling the hefty price
tags paid by Edgewell and Unilever to acquire direct- to-
consumer businesses like Harry’s and Dollar Shave Club etc.,
through which they achieve this). They also don’t have the same
service requirement as a telco, utility, or automaker. In these cases,
customers are so reliant on the product in their daily life, there is
a high potential for disappointment if brand promises aren’t kept,
hence the difference in consumer satisfaction rankings between
CPG companies and telcos.
Value is not based only on the most recent channel experience.
It’s composed of pillars across the buying, service, product, and
brand experience. Through these, we need to find the right balance
between being personalized and being personal (see Figure ).
With identity at the core of every marketing touchpoint, you will start
to see more patterns of behavior at an individual level that can lead
to more personal experiences. You should be putting in place
Trustworthy &
Enjoyable
Through relevancy
and transparency
Memorable
Imagery, experience,
and wow factor
BRAND
EXPERIEN
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BUYING
EXPERIEN
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PRODUC
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EXPERIEN
CE
Caring
Pre-empting challenges
with proactive support
SERVIC
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EXPERIEN
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Easy
Simplicity through
being frictionless
Figure : Shift from Personalization to Personal
data capture procedures that allow you to develop experiences in
more dynamic ways. Start by thinking of the various potential
touchpoints, then focus your efforts on the data that you can
capture on your own. Ask yourself some questions to guide your
decision. For instance: Should you track every site interaction or
just the ones that tend to lead to deeper engagements? When
should you interrupt the customer-driven experience with a brand-
driven experience? How does a customer behave differently before
viewing a product vs. after? Once you have identified the key points
of insight, you need to employ technology that can keep pace with
the customer. A dynamic, artificial intelligence (AI)-driven
creative experience then becomes paramount to your success. Your
execution plan should be based on known points of friction for your
customers. Do they have enough information to make a decision?
Do they have the information on where and how to engage with the
brand? Do you reach out to them immediately after an interaction or
give them time to complete other research? Each of these questions
has a different answer, based on the person and his or her prior
interactions with you. You can’t just put a dynamic content site in play
and let it run. You need the experience to be dynamic and not just
deliver static creative. You need to allow interactions in one place to
drive how you communicate back to the customer in all channels.
Address the total customer experience
Thinking customer first and focusing on the total customer
experience requires a clear strategy, a connected set of capabilities,
and often a mindset change.
Genuinely thinking customer first means recognizing that every
customer is on some journey and is somewhere on a lifecycle with
your business, irrespective of where in your organizational structure
they might be engaging right now. So thinking from your business’s
perspective, customers or prospects fit into one of four stages, as
illustrated in Figure .
You are either trying to win them over for the first time, keep them
engaged, grow them, or re-engage them. The reality is that the
majority of marketing spend is concentrated in the FIND and WIN
stages, but the real customer value is generated when those
customers are kept active and grow over time. Lifetime value is
where the ROI from marketing spend really kicks in. And that value
is far more likely to grow if you focus on meeting the connected
needs of your customers at every stage of their journey and in
whatever interaction they are having with you (a refund, shopping
for something new, an inquiry, a change of circumstance, a
complaint, etc.).
Researching
Dormant
At risk
Reactive
Figure : Focus on Key Stages
Acquisition –
Lead generation
SUSPECT
Not in market
PROSPECT
Lead
Retention –
Repurchase
optimization
and loyalty CUSTOMER
Advocacy
Warm
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WINBACK
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When focusing on the customer experience, you must consider
each of these stages in a more holistic manner. You need to be able
to recognize when a customer has already made a purchase based
on prior actions, not just when you have sales data. You can do this
by observing how known customers behave when they have
moved between each of these stages and applying that knowledge
to customers that you don’t know, based on similar actions. As an
example, assume that 70 percent of people who have already
purchased a product go to your mobile site the day after purchase
to get installation and setup instructions. You then see a group of
customers who have visited the site frequently for
the past three weeks but go dormant. If they later come back to the
site and search for the product, you should make those instructions
prominent in the experience, based on the idea that they may have
made the purchase somewhere besides the website.
Delivering on this total customer experience is about a balance
of all capabilities, hard and soft, and it can be achieved in an
incremental and scalable way. It doesn’t have to be a big, complex,
cross-business plan. It requires a clear customer vision, an ability to
connect customer experiences across every relevant channel,
unambiguous measures of a connected customer experience,
and an agile business able to think big, start small, and then
operationalize ideas into action.
It requires an integrated set of capabilities, through which to build the
experience landscape and connect, create, and deliver the right
customer experiences (see Figure ).
Email Site Search Display CC Social Offline
Figure :
Integrated
Experience Stack
CUSTOMER INTERACTION
PERSONALIZA
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In summary
In the past few years, the role of marketing has shifted noticeably, taking
on ownership for customer engagement, satisfaction, acquisition,
retention, and lifetime value. That means marketing now is responsible
for growth and must stretch its purview to include ownership of customer
data and the overall customer experience. This can’t be achieved without
a clear connection to all customer-related business functions: sales,
service, finance, logistics, product, channel etc.
A number of obstacles can slow down your progress toward the
creation of relevant and engaging customer experiences:
– Focusing on channel experiences – Neutralize your
marketing bias and focus on the total customer experience,
rather than fixating on brand metrics.
– Attempting too many channels at the same time – Omni-
channel, which suggests every channel and everywhere, can
be overwhelming, resulting in frustration and failure. Take a
channel+1 approach, which starts out using what you have, rather
than waiting for new capabilities. It is faster, easier, and more
closely aligned to an agile way of working.
– Believing that technology will solve this for you – The tech
is an important enabler, but it requires the alignment of numerous
business activities to make it real.
– Measuring brand metrics over customer experience – Since
you get what you measure, if we measure what matters to
customers, we are most likely to get customers who care, which
gives us a solid foundation to align the business around. If we
measure conversion metrics in individual channels (., metrics
that the brand wants to track, rather than those customers
care about), then we may get channel-based efficiencies, but
disenfranchised customers.
– Thinking that every customer interaction has to be an
immersive experience – Some experiences need to be invisible,
and often, those are the most important in meeting the total
customer experience objectives.
– Perpetuating the organizational silos that stall progress –
Functional divisions that exist within most businesses act as barriers
that separate customer experiences. Only when these silos are
dissolved can the experiences be truly and seamlessly connected.
This is more than marketing. It’s about the customer, and it’s what Jeff
Bezos calls an “obsession with the customer.” Amazon is excellent at
facilitating a purchase, is generally flawless in its delivery, and makes it
easy for a customer to give feedback on every stage of this journey. This
experience is underpinned with a genuinely no quibble return policy,
making it almost as easy to return a product as it was to buy it. They do all
of these stages in a connected way, with the customer front and center.
Bezos once said, “Customers are always beautifully, wonderfully
dissatisfied, even when they report being happy and business is great. Even
when they don’t know it, customers want something better, and your desire to
delight customers will drive you to invent on their behalf.”
So, even though Amazon ticks these boxes today, Bezos and his team
fully recognize that what got them here is probably not good enough to
get them to their desired future state, so they are continuously looking to
optimize, evolve, and disrupt their total customer experience.
We see this as a continuously evolving process of making things
work – quickly – then setting about to automate, optimize, and make
experiences better. And to keep making them better. And finally, by
institutionalizing these activities, to deliver a connected customer
experience that drives lifetime value.
Figure : Experience is Constantly Evolving
Make it WORK Make it BETTER Make it BIGGER
Deploy the platforms,
setup, data connection,
taxonomies, use case
proving
Automate, connect
Channel +1, integrate,
enhance analytics,
content velocity, wow
Institutionalize,
transform, full customer
strategy, umbrella KPI
framework, scale fast
wnership of Identity
MARKETING
IMPERATIVES
Take
O
26 2020
Take Ownership of Identity
2020 MARKETING IMPERATIVES
27
IMPERATIVE TWO
TAKE OWNERSHIP OF
IDENTITY
2020 MARKETING IMPERATIVES 27
take ownership
of identity
Understanding customer journeys and
delivering great experiences
Customer centricity has never been more
important to businesses, but all are faced
with an identity challenge. Brands have a
common vision of right time, place, person,
and message delivered in real time across the
customer journey, while also providing more
effective, hyper-personalized service and
commerce. But this vision is only as good as
a company’s ability to know who it is really
talking to at every touchpoint.
At the same time, unprecedented changes are taking place around
US privacy regulations, beginning with the 2020 rollout of the
California Consumer Privacy Act (CCPA). Due to the influence
of consumer privacy concerns, big marketing tech players like
Google, Apple, and Facebook are deprecating third-party cookie-
based tracking and data use for targeting. They’re building their
walls higher, enticing marketers to use their versions of identity for
audience creation, targeting, and measurement. Marketers are
witnessing the collapse of the open third-party cookie as the long-
standing currency of the digital marketing and media ecosystem.
As this is playing out, new winners have emerged by placing
person-based identity and hyper-personalization at the center of
their businesses to drive sustainable, personalized value
exchanges with customers. Companies like Amazon, Netflix, Uber,
and Airbnb have transformed how brands are built and the ways that
commerce and service are delivered, spawning a direct-to- consumer
revolution across almost every industry. And today’s person ID-
based media ecosystems, such as AT&T and Warner Brothers’
Xandr and Verizon Media (Verizon, AOL, Yahoo), are giving rise
to a new generation of brands that are cookie-less from the start.
These companies and many others are developing identity using PII-
based identifiers from subscriptions, service, and content
consumption as one ID at a person level. Their hyper-personalized
approach to customer engagement is winning the battle for the person
ID among cross-screen content, commerce, targeting, and
measurement. For instance, thousands of content elements factor into
personalized recommendations (., Netflix, Amazon) and also for
targeted advertising.
Marketers today have an opportunity to take ownership of identity
at the person level and make this a key advantage over
competitors. To do this, they must build their own “private identity
graphs,” versus relying on walled-garden players like Google
and Facebook or the quickly fading third-party cookie-based events
across the open web. Done properly, a marketer’s private identity
graph can unify an organization around the customer, from marketing
and media to commerce and service. This leads to better insights,
segmentation and modeling, advertising, personalization, and
analytics. We believe identity is not only the linchpin of marketing,
but at the heart of how businesses must operate. How do you take
advantage of the changes taking place, future-proof your
organization, and win?
• Build a private ID graph
• Use data clean rooms for person-based analytics
• Maximize addressable targeting
Build a private ID graph
According to a recent Winterberry Group study, the identity market
will increase 188 percent in the US over the next five years, from
$900 million in 2018 to $ billion by Over the past few years,
marketers have grown more comfortable with utilizing their first-party
data in combination with identity resolution or ID graph suppliers
to fuel their people-based ad campaigns, site personalization, and
analytics. Today’s ID graphs are presented to marketers much like a
“public utility grid,” with a simple and tidy proposition: input your
first-party data (., CRM lists) and we will match it to a person who
can be reached. The quality and effectiveness of these services are
presented via an easy-to-understand metric known as “match rate.” A
brand or publisher sends in a file of known individuals and the ID
graph sends back a rate at which it can link those consumer IDs
(email addresses, for the most part) to a cookie or a device. The
bigger the match rate the better, right? Not necessarily. If you crack
open what is perceived as a homogeneous and tidy set of email-
to-cookie or device ID pairs arrayed one-to-one, you might find
matches built using math that counts every combination of a person
and device in a household or building. Or you may discover linkages
between emails and cookies as old as 90-120 days counted the same
as those 15 days old or less. And often, linkages make no sense, in
some cases representing botnets (., a single cookie associated with
1,000+ people).
“Public identity graphs” are constructed primarily out of third-party
relationships, using cookies and other identifiers across thousands of
websites to establish linkage with consumers. This has worked well
until now, but going forward, the pool of high-quality matches
available will become increasingly scarce, as third-party cookie
linkages get blocked and sources of third-party identity creation dry
up, due to challenges like privacy regulation and browser changes.
A marketer’s private identity graph is created from a PII-based
record of a consumer at the center, with all disparate consumer
1Benes, Ross. “Why Marketers Struggle to Consistently Identify Their Audiences.” eMarketer, August 22,
2018.
IDs resolved to a master person ID. Person match confidence is
the metric used to evaluate the quality and accuracy of identity.
This connects prospect and customer touchpoints back to a known
person ID across channels. PII-based records that sit in the CRM
organization are linked with digital identities, such as first-party
cookies and device IDs from website, app visits, and media
exposure. A private identity graph owns its linkages across
marketing platforms and media publishers with the transparency
and controls to decide what level of person match confidence is
best for certain use cases. For instance, a one-to-one best person
match confidence (., email matched to email) enables hyper-
personalized audience targeting to highly qualified prospects in
media. Contrast this with the matching of that same audience at a
one-to-four person match confidence (., email to a third-party
cookie ID match), which would not enable hyper-personalization
because the individual could be the child in the home or the spouse
of the individual. A marketer’s private ID graph can also create
identity from second-party media partners that share in the graph.
For instance, visits to a publisher’s pages can recognize logged
in or high recency visitors and through data sharing agreements
with high person match confidence (ex: email to email), help the
marketer resolve what normally would be an unknown, unidentified
audience to a known person ID able to be reached with 1:1
messaging, measured at a true reach and frequency level, and tied to
a transaction event.
The use of a private ID graph in targeting and measurement drives
improved marketing efficiencies and effectiveness, as well as the
ability to understand the customer and extend reach across other
channels, like outbound email, personalized service, and more (see
Figure ). In fact, media alone achieves 25 percent average
efficiency gains from elimination of wasteful impressions and
greater than 20 percent ROI improvements from the ability to close
the loop of transaction events and trim down cost per action across
brands. This is the payoff of hyper-personalization.
Figure : Private ID Graphs vs Public ID
Graphs
Match-Rate 87%
Today’s predominant, “public” ID graph providers are
a black box reliant heavily on third-party cookies and
other suspect digital signals.
PERSO
N ID
CONFIDEN
CE
Third-party IDs
PERSO
N ID
The disappearance of third-party cookies will put
enormous pressure on the black box ID graph providers
to create scale from lower confidence signals.
CONFIDEN
CE
Third-party IDs
PERSO
N ID
The marketer’s Private ID Graph will:
• Be customizable to their needs and use-cases
• Be focused on mining first-party data
• Leverage “groomed,” high-confidence third-party signals
• Be flexible and responsive to privacy regulations and industry change
CONFIDENCE
Third-party IDs
First-party IDs
S
C
A
L
E
S
C
A
L
E
S
C
A
L
E
The steps businesses need to take in building their private ID
graphs require organizational change and collaboration. Identity
must be a well-funded and executive-supported initiative. It must
have a clear owner who sits closest to functions such as data
science and customer analytics, modeling, and measurement. It
must focus on accuracy and quality of data about customers and
prospects. It must also be connected to technology organizations
making enterprise marketing and advertising tech decisions that
can make or break people-based enablement.
– Engage with a trusted identity resolution provider that
builds identity from the center of a PII-based record.
Ensure there’s the utmost focus on identity hygiene and person
match confidence, rather than identity built from third-party
cookie and device-based events with limited visibility into
how a match rate is achieved. Also ensure that identity
providers abide by all local-market laws and regulations
regarding consumer privacy.
– Decide on how the organization will source the
highest- quality, person-based, third-party data from
providers and ensure that it is resolved to your person
ID. Your identity strategy should be a future-facing,
people-based data strategy. Your customer interactions
and prospecting efforts across channels will rely on this,
because identity decoupled from third-party data will get
messy. Each data provider will come to the table with a
separate version of data that will challenge the integrity of
the person ID that you’re trying to resolve.
– Ensure that your private ID graph can take CRM,
digital experience and commerce, and media
exposures and resolve these events back to your
master person ID. This will help build your private ID
graph with the highest person match confidence possible
and strengthen your organization’s focus on the creation of
its customer and prospect value exchanges and cross-
journey experiences (Figure ).
Figure : Components of a Person ID
that Maximizes “Person Match
Confidence”
Billions of email to
cookie or device ID
pairs
A brand’s first-party
email to cookie pairs
HOUSEHOLD ID
THE SMITHS
123 Main St.
Centerport, NY 11721
631-435-2867
130 million
US
households
L
LAURA SMITH
123 Main St.
Centerport, NY 11721
631-435-2867
PERSON ID
242 million US adults at name,
address, and phone level
Hundreds of millions of
consumer email addresses
p
Use data clean rooms for person-
based analytics
In order to get the greatest value from their private ID graphs,
businesses must enable a central “data clean room” within their
organizations. Here, all identity-based records and events that have
been resolved to their master person ID, as well as all data appended
(., CRM records, PII-sourced third-party data, etc.), can be
accessed by analytics teams through analytic tools that sit on top.
Marketers will need to ensure that this data environment can extract
PII from its universe of anonymous person level IDs. This allows
data to be analyzed, segments and models to be built, and marketing,
media, experience, and commerce touchpoints to be measured at the
finest grain of identity possible, with local market privacy regulations
in mind.
There’s an important distinction between a data clean room
powering analytics that leverage a private ID graph and a
traditional data lake or warehouse (see Figure ). The data
clean room utilizes a full universe of a consumer population as a
basis of identity and data versus just an organization’s customer
population. This can be a key advantage for marketers as they, in
effect, can treat the entire population (with their customer
population as a sub-set) as if it’s their CRM database. Implemented
properly, a data clean room can create and deliver people-based
audiences at identity levels required for CRM programs (.,
email addresses, street addresses for direct mail). They can also
create anonymized IDs of these same audiences that can link to
channels like media for ID matching, targeting, and person-based
measurement and to martech and adtech platforms for real-time
personalization and decisioning.
Figure : A Data Clean Room that Leverages a Private ID Graph
Marketer’s Data Second- and Third-Party Data
CRM IDs
Ad server IDs
Site analytics
IDs
Ad and marketing tech IDs
Third-party data
Publisher IDs
12a458285 82a965582 82a965582 82a965582 0654RkUs Ingested data translated and
keyed to anonymous, client-
specific person IDs.
PERSON ID
PERSON ID
Privacy
- safe
Data is stored
in marketer’s or
identity provider’s
environment. Analytic
tools allow person-
based audience
management and
measurement.
Street
Address
Clear
Email
Hashed
Email
Cookie
ID
Device
ID
Person ID re-keyed to
CRM, email hash, etc., for
advertising, marketing, and
experience connections
matching. Target ID re-keyed
to person ID for measurement.
C
O
N
N
E
C
T
IO
N
S
C
L
E
A
N
R
O
O
M
D
A
T
A
S
O
U
R
C
E
S
Maximize addressable targeting
Organizations that bridge their CRM and customer experience
activities with media will achieve success by maximizing
addressable targeting opportunities and delivering a total
customer experience (Figure ). To do this, marketers will
need to understand how the martech and adtech platforms and
media publishers they activate through either create their own
versions of identity and targeting data or accept private ID graphs
in support of targeting (Figure ). The latter is increasing as
an offering (., from marketing cloud providers, customer data
platforms (CDPs), and media publishers). Marketers will need to
get closer to the way platforms and publishers treat identity inputs
like private ID graphs, and if platforms don’t have this, marketers
should push for it and work hard to integrate this capability.
As the cookie dies, industry pressure will naturally help marketers
when asking publishers for matching at email-to-email levels (high
person match confidence, or when they are seeking a deep dive into
how they accept and match audiences and derive matches to their
universe of IDs. The reason why major media organizations and
platforms like Adobe and Warner Bros. and AT&T are now
accepting person ID is that the more they enable the capability of
hyper-personalization, the better they can serve marketers who are
aiming to reach individuals with better performing content. Also
important is the granularity of the data that platforms and media
publishers give marketers back as an ID for measurement. Within
privacy guidelines, marketers should ask for a two-way relationship
of identity matching. First, an individual audience list into the
platform or publisher for targeting, and second, an audience list at
that same integrity of identity back from the platform or publisher.
This approach allows you to understand reach and frequency,
conduct performance measurement, and glean insights on engagers
at a person level.
Figure : End-to-End Process
that Maximizes Addressable
Targeting
Data
Third-party data
sources, first-party
CRM, and digital data
resolved and linked to
person ID.
PERSON ID
Identity
PII-based person ID; all US
consumers and households.
Person IDs/data
into clean room
for person-based
segments, models, and
measurement.
Connections
Person ID graph
connections. Interface
for audience creation,
addressable sizing,
and audience delivery.
Clean Room
Privacy-safe analytics
environment and tools.
Data securely keyed and
re-keyed to person IDs.
38 2020 MARKETING IMPERATIVES
PERSON
ID
Figure : Activation Connections Use a Private ID Graph to
Drive Highest Confidence of Person Matches
ADVERTISING MARKETING & EXPERIENCE
Display and Video Publishers
Large Digital and Social Platforms
Ad-Tech
TV and Out-of-Home
Marketing Clouds
CDPs
Decisioning and Personalization
In summary
Leveraging identity as a key business advantage for organizations is
a challenge to accomplish, but if done right, it will drive efficiencies
and effectiveness across marketing and media programs. It will help
you understand customers and deliver value to them across their
various experiences and transactions with your brand. The ability to
solve for identity across an enterprise will also drive better informed
product development and higher value service engagements from the
strength of person-level insights and a clear picture of the customer
journey. Getting closer to customers has never been more important.
Building a private ID graph, enabling data clean rooms for analytics,
and maximizing addressable targeting will create new winners in
people-based marketing and experience for years to come.
Enable Agility through Strategic
Sourcing
MARKETING IMPERATIVES
40 2020
Enable Agility through Strategic Sourcing
2020 MARKETING IMPERATIVES
41
IMPERATIVE THREE
ENABLE AGILITY THROUGH
STRATEGIC SOURCING
2020 MARKETING IMPERATIVES 41
enable agility
through strategic
sourcing
Calibrating the marketing resources mix
Realizing the vision of hyper-
personalization and the total customer
experience will require a robust
supporting data and technology
infrastructure and a thoughtful
reconsideration of your current marketing
operations to realign your people, skills, and
processes. Because
it’s a complicated process and there’s no
quick fix, not every company will take on
this challenge. But the few who invest
in the effort to optimize their marketing
organization will also be building an
advantage that will be difficult to replicate.
And of the many decisions around organizational and operating
structure, one of the most complex is whether to insource or
outsource. It seems like every few years the pendulum swings again
– from the previous mad dash to outsource and offshore as much
and as quickly as possible to the more recent flurry of interest in
bringing marketing and media services back from external partners
and standing up in-house agencies.
Function
What activity is
being evaluated?
Strategy Media Creative
1
Analytics Technology
Source
Who should perform
this function?
2 Insource Outsource
Location
Where should the
resources be?
3 Onshore Offshore
Today’s initiatives are being driven by more than just cost, but also
strategic priorities, including:
– Agility: Greater speed and flexibility in execution
– Accountability: Transparency in returns on marketing
investment
– Innovation: Differentiation through new processes and
offerings
This is not an either/or decision about bringing everything in-house
or relying exclusively on external partners. There is a continuum of
possible combinations across three interconnected components
(Figure ), and it begins with identifying the function and activities
that are being evaluated across strategy, media, creative, analytics,
and technology. Next is determining whether the activities are best
suited to be performed in-house or outsourced to external partners, as
well as how much should be moved to the new model. Finally,
there’s the question of location and whether the work will be done
onshore or offshore.
Figure : Components of Strategic Sourcing Decisions
Function: Identify which activity is
being evaluated
More and more leading brands are moving marketing capabilities
away from agencies and inside their organization. According to
research by Forrester and the In-house Agency Forum, 64 percent
of companies have in-house agencies today, a 52 percent increase
since Seventy-five percent of in-house agencies reported
growing in size over the past two years. And more than half employ at
least 50 full-time employees. Similarly, a recent ANA study concludes
that the number of companies with in-house agencies has grown
• In 2018, 78 percent of companies polled said they had an in-
house agency function – up from 58 percent in 2013 and 42
percent in 2008.
• 44 percent of study respondents established an in-house
agency within the past five years.
• 70 percent of respondents have moved at least some
established business formerly handled by external agencies
in-house over the past three years.
The real situation is much less clear-cut. In fact, the ANA found that
90 percent of marketers who have in-house agencies continue to
work with outside shops. And a broader scan of marketing related
services sourcing shows that there is no dominant pattern in who is
performing these activities – whether in-house, by an agency, or a
combination of both.
In recent surveys about sourcing choices across 30 different
marketing services, there is a slight skew toward in-house only (41%),
but agency as the sole provider (24%) or both agency and in-house
(35%) were also Marketing strategy activities were the most
frequently cited as developed in-house only. And despite all the
headlines about brands setting up in-house media buying, media
continues (for now) to be the most frequently cited service provided
exclusively by agency partners.
1 “Rethink The In-House Agency Hype,” Forrester blogs, November 2018
2 “Twelve Top Takeaways from ANA In-House Agency Report,” ANA, October 2018
3 Digital Marketing Institute "20/20 Vision" A Marketing Leader's View of Digital's Future" Nov 28, 2018
and NewBase, "The Evolving Marketer 2018"
To begin the process of evaluating the right sourcing mix, first identify
the functional area and activity(ies) of focus (Figure ). For each
of the five main areas of strategy, media, analytics, creative, and
technology, there are a number of activities that can be performed
in-house, by an agency partner or shared between the two. And it’s a
two-way street that’s not just about bringing work in-house. In some
cases, there might be activities that are owned by your internal team
that would benefit from the support of external partners.
Figure : Marketing Functions and Activities
• Brand Strategy
• Customer Strategy
• Channel Strategy
• Competitive Monitoring
• Market Research
• Attribution
• Campaign Reporting
• Market Research
• Media Mix Modeling
• Segmentation & Response
Models
• Technology
Implementation
• Database Operations &
Maintenance
• Adtech Operations &
Maintenance
So, which activity should you start with? Some criteria for activities
that may warrant a different approach to sourcing:
• Area with rapid rate of change/innovation
• Diminishing or flat return on investment
• Increasing external vendor/labor costs or internal headcount
• Ongoing issues with execution
• Challenges with staffing at the right level and/or at the right skills
• Paid Search Planning
& Buying
• Programmatic Media
Planning & Buying
• Direct Media Planning
& Buying
Media
• Media Campaign
• Social Media
• Content Development
• Site Design & Update
• Email Development
Creative
Strategy
Analytics
Technology
Source: Determine who should
perform this function
As a general rule, any strategic capability that represents a core
competency should be kept in-house. A core competency refers to
skills, knowledge, or expertise that’s difficult to imitate and provides
an advantage over competitors. In the context of marketing activities,
that would typically include your portfolio, branding,
and customer strategies. But even in those cases, it’s common for
companies to engage external partners in times of change or to
provide a broader marketplace perspective. This leaves most
marketing activities open for sourcing considerations.
If your company is innovating and developing a new capability, the
main consideration should be proficiency and whether you have
a high degree of expertise in this area. In the majority of these
situations, companies will benefit from the input of external advisors
who can provide a broader market perspective and are likely to have
more exposure to and experience with emerging topics.
When it comes to execution of ongoing activities, such as campaign
execution, analytics, and platform maintenance, the main focus should
shift to competency and efficiency. Simply put, can you perform that
activity as well as (but ideally better than) external options and do so
more cost effectively? If so, keep the activity in house but if not,
outsourcing will likely be the best route (Figure ).
After filtering activities through this initial lens, there will be a few
that fall decidedly into the in-house versus outsource camp and
likely many others where the answer may be less clear cut. The
assessment of whether you are able to perform an activity “better or
as well as” external options, whether for innovation or execution
activities, has a number of related considerations.
Figure summarizes the requirements to consider in those
cases where a more nuanced review is warranted. These criteria
include how easy (or difficult) it is to get things done internally,
Figure :
Sourcing Options
Pyramid
such as availability of resources with the requisite expertise, as well
as the level of efficiency of internal processes and procedures. Cost
also comes into play for both options. On the one hand, a desire to
reduce external vendor costs may result in a decision
to bring work in-house. But just as often, brands have constraints on
internal headcount and need to rely on external partners to provide
incremental capacity. Finally, there may be some industry or firm-
specific considerations, such as the volatility of demand for
marketing services or the need to maintain executional control in a
highly regulated industry.
CORE
Proprietary
and Critical
to Business
Core
Competencies
In-
House
INNOVATION
Development of
New Capability or
Transformation in
Business Approach
Our level of
expertise is at or
greater than
external options
Our level of
expertise is
lower than
external options
PROFICIEN
CY
In-House Outsource
EXECUTIO
N
Commodity
with Limited
Opportunity for
Differentiation
We perform this activity well
and at a lower cost than
external options
We do not perform this activity
well and/or do so at a higher
cost than external options
COMPETEN
CY &
EFFICIENC
Y
In-House Outsource
Better Fit for Better Fit
for In-House OutsourcedEvaluation
Criteria
Figure : In-House vs. Outsource Evaluation Criteria
Core competency/source of competitive advantage +++
Need a high degree of control ++
Availability of internal resources with requisite skills ++
Desire to reduce vendor costs ++
Need to quickly scale team up/down +++
Access to expertise in new/emerging topics +++
Desire to reduce overhead costs ++
Circumvent cumbersome internal processes +
After the sourcing decision is made, you will need to address how
much of the work will be done in-house or outsourced. While
there are many circumstances where it makes sense to bring a
specific activity completely in-house or fully outsource, there are
just as many scenarios where using both in-house and outsourced
resources for an activity may make the most sense. For example,
a mixed staffing model would be a natural interim step for
companies who want to gradually move activities toward a full in-
house or outsourced model. Or in some cases, a hybrid
team comprised of external resources sitting within internal teams
may become a longer-term solution. This approach is increasingly
favored by companies to maximize the speed and depth of brand,
business, and culture assimilation and significantly streamlines
communications and coordination.
Combining the flexibility of outsourcing and the integrated working
model of an in-house team, Filter, a Merkle company, specializes
in standing up hybrid staffing models where expert teams are
embedded within a client’s organization. One such case is a leading
global athletic brand that was embarking on a new direct-to- consumer
strategy. To support this ambitious, multi-regional initiative, the brand
needed to dramatically scale and up-level its multi-channel campaign
capabilities. But instead of growing its internal teams, the goal was to
act smarter and restructure the way outside agencies, FTEs, and in-
house partners were leveraged.
Under this model, Filter integrated teams of designers, writers,
producers, and channel specialists on-site, within their Global Digital
Brand organization. Based on the success of this approach, Filter
later added teams of content strategists, retail specialists, and other
digital brand experts, and today works with more than a dozen
different digital marketing stakeholders across the organization.
These efforts have accelerated the client’s DTC strategy with
campaigns and content that deliver greater impact at faster speeds,
while providing the client with the flexibility needed to quickly ramp
up/down specific areas based on business needs. For FY18, the
client credited the DTC program for driving virtually 100 percent of
its growth, with a 9 percent revenue increase in Q4, followed by a 10
percent increase in Q1 of 2019.
CASE STUDY
Best of in-house and outsource
through a hybrid model
Outsourced
Onshore
Traditional staffing model Third-party staffed teams in
with full-time employees, the same geography (may
working on site work onsite or offsite)
Offshore
Company owned and
operated delivery centers,
typically in non-domestic,
lower cost location
Third-party staffed teams in
a non-domestic, lower cost
location
Location: Decide where the resources
should reside
The final consideration is the location of resources. This is relevant
whether you have decided in-house or outsource as your preferred
staffing option. While the trend toward offshore has slowed
in recent years, it is still on the Often “outsourced” and
“offshore” are used interchangeably but who does the work (your
company or a vendor) and where the work is done (domestic or
non-domestic) are two separate matters (Figure ). One caveat is
that the in-house/offshore may not be the best choice when only a
small number of resources are required, due to the effort and cost of
Figure : Onshore and Offshore Options
In-House
Better Fit for Better Fit
for Onshore OffshoreRequirements
Complex legal/regulatory considerations ++
Require a small number of resources +
Reduce labor costs ++
Cost savings historically had been the main impetus to offshoring
and it continues to be a valid reason to consider this option.
However, in light of rising global labor costs, regulatory
complexities, and the communication challenges of working with
remote teams, the overall fit of offshoring to your needs should be
carefully weighed. Obviously, offshore would not be an option if
physical proximity or real-time communication are requirements.
Additional factors to consider are the type of skills required and the
size of the team you’re considering. For marketers, marketing
technology and analytics related functions continue to be strong fits
for offshore. Other marketing activities that many companies opt to
perform offshore include creative production, secondary research,
and competitive monitoring.
Need for physical proximity ++
Need for real-time communication +
Require STEM expertise (science, technology,
engineering, math)
Access to large pool of resources +
4HfS Research in conjunction w/KPMG “State of Operations and Outsourcing” 2014, 2016, and 2018
5Discussion of offshore will also encompass the “nearshore” approach, where the team is locat-
ed in a nearby country, typically less than a three-hour time difference between the contractor and
the rest of the team. In the case of the United States, this would mean working with staff in
Canada or Mexico, or perhaps Central or South America.
+
+
In summary
Ultimately, the optimal team structure will be one that’s unique to
your firm. To determine the right resource mix for your marketing
organization, here are some guidelines:
• Keep activities in-house if they are core to your business or
if your internal team can perform them at a comparable or
higher level of effectiveness and efficiency.
• Consider a hybrid approach where external teams are co-
located with internal resources.
• Fit and value should be more important than cost management
when deliberating changes to your resourcing model.
Deliver the Total Customer Experience
2020 MARKETING IMPERATIVES
53
CONCLUSION
The very definition of marketing is
in the midst of a meaningful
change, because of rapid shifts in
consumer behavior. Forces like the
direct-to-
consumer business model are taking the
need for personalization to a new level.
Netflix, Uber, Dollar Shave Club, and
their ilk, have materially changed
customer expectations around the ways
they interact and engage with brands.
CMOs find themselves navigating these forces, while at the same
time adjusting to increased privacy concerns and regulations.
The CMO is in the driver’s seat of a major pivot in the marketing
approach that must be carried out across the entire organization.
Hyper-personalization means targeted, relevant experiences at
every encounter, from marketing to sales to service and beyond,
encompassing the brand as a whole. Consumers consider all of
these touchpoints part of the connected customer experience, and
the role of the CMO is evolving to influence it.
You’ll only succeed at delivering upon a connected customer
experience if you start with the customer, master identity, and
create agile working environments.
