While advertising is technically a segment of marketing, ad-tech has developed very separately from marketing technology for several reasons. For one, advertising is built on an anonymous customer identity rather than a known, or authenticated, one. A second key difference is that advertising can be seen as 'renting the eyeball' vs. 'owning the eyeball', according to Russell Loarridge at Janrain.
Marketers are pushing a lot of ad spend to effectively 'rent' customers over and over, but comparatively little on tools to help manage customer identity to retain customers and build relationships with them. In 2014, the expected worldwide advertising spend is US$133 billion. Compare that with expected marketing software spend of US$20.2 billion. Of the two budgets combined, that's only 15% spent on marketing software.
Each marketer will have to decide based on business goals the value of acquiring new prospects vs. nurturing and retaining existing customers. Yet the disproportionate spending is surprising, since Adobe has found that 41% of online revenue comes from returning purchasers, even though they represent only 8% of visitors. Once a customer is known, they already have brand familiarity, and possibly affinity, and can be engaged again without additional acquisition cost.
Of course, one of the advantages of anonymous user data, and a reason it has been the primary driver in personalisation tactics to date, is that it can be used in aggregate. A variety of ad networks and vendors use pooled anonymous data in order to know and target cookied users in ways one company on its own never could. Yet being anonymous also limits the types of data that can be used and how it can be enriched.
There are stricter privacy regulations around known identity, and data cannot be aggregated the same way. But a known user profile can include Personally Identifiable Information (PII) and be continuously enriched with known customer data (i.e. progressive profiling).
"As users and their devices create more informative data than ever, known identity offers marketers an opportunity to leverage deeper insights about their customers and personalise their experiences more deeply and accurately than anonymous data," concluded Loarridge.