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Is personalization, ID resolution worth risking customer trust?

As privacy regulations continue to expand and ad blocker usage grows, marketers are being forced to reconsider how they track and target users.

Amy Gesenhues on February 27, 2020

There’s a lot of buzz regarding personalization and ID resolution. And for some — like Indiana’s Community Health Network, which we profiled yesterday — it can really work when it comes to customer engagement. But there’s another view.

“Most marketers are not yet really thinking twice about ID resolution platforms and the large-scale automated pursuit of people that they enable,” said Mark Stouse, the CEO of Proof Analytics, a company that offers regression analytics services via its marketing mix modeling capabilities. “Most marketers believe that ID resolution is an absolute prerequisite to driving business and show value, which is not accurate.”

Last year, Gartner predicted 80% of marketers will drop their personalization efforts during the next five years. The research company cited lack of ROI and too many customer data management obstacles as the primary reasons brands would abandon personalization. But, it also listed a third motive, and growing trending: “The continuing decline in consumer trust and rising consequences, from fines imposed by regulators to tracking barriers erected by tech companies.”

While many in the industry may balk at the idea of marketers walking away from personalization initiatives — there are others lie Stouse who argue advertisers need to listen to the marketplace and respect consumers’ wishes not to be tracked.

Respecting the ‘No!’

Stouse says it’s time marketers listen to the marketplace and compares current industry circumstances to his parenting tactics: “When my sons were much younger, my wife and I taught them to ‘respect the No’ — it’s one of the most valuable lessons any of us can learn,” said Stouse, “Yet many marketers are not ‘respecting the No’ because they feel they have no other way to show their value.”

Granted, Stouse’s business offerings could be seen as an alternative to ID resolution platforms, but the Gartner report backs up Stouse’s take, claiming that consumers are developing a “jaundiced eye” toward marketers’ efforts to embrace them: “Their [consumers’] increasingly cluttered email inboxes and mobile phone notification centers may lead them to ignore even the most carefully personalized and contextualized message.”

This is likely why more people are using ad blockers. Emarketer forecasted the U.S. ad blocking population would reach 73.2 million by the end of 2019 — it was a slight downgrade from what it had originally predicted, but still represented an increase of 3 million more ad-blocking users than the previous year.

“The focus on ID resolution-enabled activities also indicate that many marketers see their value in very narrow, top-of-funnel terms rather than enabling a better customer experience throughout their journey,” said Stouse.

Privacy regulations driving the push-back against ID resolution

Gartner analyst Andrew Frank believes there are more powerful forces at work than consumer activism when it comes to the role ID resolution plays in user privacy issues.

“While it’s true that use of ad blockers and identity-cloaking technologies is up, the actions of browser and platforms providers, legislators and regulators, and industry groups like IAB are more likely to determine the fate of ID resolution than consumer awareness in my opinion,” said Frank, “I don’t think many consumers have formed opinions about the suitability of privacy-preserving constraints that ID resolution is attempting to promote.”

Frank says the consent and access requirements of legislation like GDPR and CCPA are driving up the costs of personalization and putting more pressure on marketers to prove the economic value.

“ID resolution platforms may help marketers better understand their customers and consolidate measurement across devices, but the ultimate viability of efforts to preserve user-level tracking abilities across domains and devices is really up in the air,” said Frank.

Stouse agrees that the prevalence of personalization platforms — and the tracking and targeting at scale that automation has enabled — has triggered data regulations from Europe and California.

“History shows us over and over again that if an industry can’t keep itself from abusing its power, it will be regulated,” said Stouse, “The EU is already preparing its next round of regulation to tighten the loopholes in GDPR.”

The privacy laws coming out of Europe and California will set the standard for personalization based on sheer market weight, according to Stouse. He says the move to regulate has only just begun: “Risks are getting bigger and bigger, particularly in terms of fines, but also negative exposure.”

The impact of personalization and automation on business networks

Stouse brings up a separate issue that is rarely touched on by the marketing industry — the impact of personalization and ID resolution technology on corporate organizations. During a recent presentation Stouse gave covering the CMO-CIO relationship for a group of about 40 CIOs from large companies, he learned an alarming data point during the Q&A portion of his talk.

The CIOs told him that when they perform audits on incoming email traffic from outside their firewalls, more than 85% is generated by marketing automation platforms.

“It places a huge burden on their networks and actually costs them money,” said Stouse, “A lot of companies are beginning to put technology and internal regulations in place, both designed to protect their networks and to shield employees from ID resolution, tracking and targeting.”

Stouse said some companies are starting to send cease-and-desist letters to particularly egregious vendors and that he’s even seen one such letter that threatened to blacklist the offending company — making it impossible to do any business with the prospect. For B2B marketers especially, this could prove to be a fatal marketing move.

“Many marketers have failed to realize and value the damage that their performance marketing efforts are doing to their brands,” said Stouse. He says he knows of one Fortune 1000 company that threatened legal action against another smaller company for systematically tracking and targeting its employees for commerce purposes. “They reached an agreement that precludes the latter from doing anything to stalk and surveille their employees. No ABM, no IP tracking, nothing. And the former company, the complainant, has installed technology designed to detect and thwart those sorts of efforts.”

Marketers are stuck between a rock and a personalization platform

Industry regulations and consumer distrust may be growing, but marketers are getting mixed messages. A recent survey of more than 4,000 online shoppers conducted by Episerver, a software company that provides personalization solutions, found that 53% of the consumers wanted brands to place a higher priority on respecting their online anonymity — meanwhile, 61% said they wanted brands to prioritize personalization, “as much as they did last year.”

Episerver CEO Alex Atzberger highlighted the conflict in the survey’s announcement, saying companies are facing a digital experience paradox. Episerver noted that, while personalized content can dramatically increase retail performance indicators, data consent is key.

So what’s the answer? Frank said Gartner sees a lot of promise in marketing concepts based on aggregate persona-level targeting and measurement.

“Personification as opposed to user-level personalization,” said Frank, “We also see marketers focusing on context to establish relevance.”

Stouse’s company has found the regression analytics it provides show ID resolution-driven efforts, which are optimized to deliver immediate, short-term results, become exceptionally damaging to the company’s brand and reputation over time, slowing deal velocity and hurting sales team effort.

“There are some CMOs who have adopted the ‘physical standard’ — meaning that if different digital activities would be seen as stalking or harassment or otherwise inappropriate or unwanted behavior in the physical world — they stay away from them. That’s a courageous decision, and a highly ethical one, but it’s still pretty rare these days,” said Stouse.

Playing the long game

According to the Stouse, personalization is being framed as if it offers an exchange of value between the marketer and the consumer, but industry regulations tell a different story.

“You only have to look at the opposition and regulation that’s been forming to see that most people don’t see that as the case,” said Stouse, referencing the large number of consumers using ad blockers and browsers like Firefox to fight ID resolution efforts and the user-tracking it enables.

He brings up a noteworthy point and one that speaks to marketing’s long-term goal: “If you as a prospect feel harassed on every channel you frequent, are you more or less likely to buy? What’s the brand loyalty? What’s the lifetime value of that customer?” asked Stouse. “There is no loyalty. You’re creating a customer who will buy from you if they really need to and then immediately disconnect themselves.”