The following is a transcript of Signal CEO Mike Sands’ keynote presentation at AdExchanger’s Industry Preview 2019 conference. It has been lightly edited and condensed for clarity.
Identity: The Future of Real-Time Engagement in the Age of Going Direct
[Forrester analyst Joanna O’Connell] and I were catching up in the back, and I’m like, “Boy, I don’t know if I wanna follow you.” And she said, “You know what, don’t worry about it. I’m gonna warm up the audience for you. I’m gonna tell them all the bad news, and then you can tell them some good news.”
I wrote down a couple things that Joanna said that really resonated with me as a former CMO who’s now part of Signal. She said that companies need to be where their customers are in their very moment of need, and I thought that was really interesting. And it wasn’t lost on me when she said that customer-obsessed companies are going to be more successful by a margin of 93 percent. So the question is, how do we get there? Because everybody wants to be 93 percent more successful.
I want to start by relaying a conversation that I had with a chief marketing officer of a friendly neighborhood multibillion dollar company who’s a Signal customer. All CMOs are very nice — I know I was — so the first thing she said was “Happy New Year, Mike.” Then the next thing that she said was “How are we gonna hit our numbers this year?”
Then a rhetorical question was asked, which is “Hey, Mike, what percentage of our profits this year will come from people that we already know?” I don’t know. I said, “Fifty percent?” And she’s like “No, not even close.” “Seventy-five percent?” “Nope, higher.” “Okay, 99% of the profits will come from people that you know.” She says “No, you’re still off. One hundred percent of the profits of our company will come from people that we already know this year.”
That was completely outside of my frame of reference as a CMO, and as CEO of Signal. That really resonated with me. One hundred percent of profits were gonna come from people that you already knew. And I started to think to myself, “Well, is that true universally?” You’ll have to ask yourself that question: Will your profits this year come from people that you already know? And I think the answer’s going to be “Yes, more than 50 percent. Yes, more than 75 percent.” Will you get to 100 percent? I don’t know, but it’s gonna be pretty damn close.
The question, then, is “Do you know your customer? Can you reach them? In what context are you reaching that customer?” If customers are directly correlated to you hitting your numbers this year, this should be a deeply personal conversation that we’re all having.
I want to go back in time to my training. I got my start at Leo Burnett Media, just to date myself a good 30 years ago, and we were all taught that when we were building up our media plans, we’d start with demographics, and the old “reach times frequency equals radiant points [formula].” And we’d try to figure out how many adults 25-to-54 we needed, or how many SUV intenders we had to go reach. We always started with this notion, and we were all trained as young marketers with the funnel in mind, and “Let’s start at the top of the funnel, and let’s reach as many people as possible for the least amount of money.”
That’s the fundamental lesson that we were all taught. I actually placed a media buy with my agency once when I was a CMO, and I said, “Buy as many people that breathe as possible for under two dollars CPM.” I took it all the way to the extreme. But you know what? Ultimately, it’s the buyer that matters.
So all of us are trained from a young age: “Breathers, breathers, breathers.” Demos, psychographics, demographics. But it’s the buyer that’s at the center of the conversation, and has to be at the center of the plan. It’s an interesting lesson, because it inverts this pyramid that we all have — this notion that everything begins with the funnel.
And so if you put this together into a simple narrative about knowing your customer and you wanna relate that to a visual metaphor, I call it “the knowing chasm.” I think that there’s a knowing chasm for us personally as marketers. We don’t think about the notion of starting from a point of knowing our customer. I think that there’s a practical reality from an industry standpoint, whether it’s a textbook or the practical reality of how we go about allocating resources and executing marketing plans. We’re moving further apart from our buyers, not closer together.
But what if you start, instead, from a place of knowing? What if you flip the narrative? What happens then? I think that you can become more authentic and more personalized, without being creepy — and absolutely more relevant.
I want to draw attention to something that’s part of our daily lives now that wasn’t really a thing a few years ago. I would argue that part of the reason why [direct-to-consumer] brands are getting it right is that they are starting from a position of knowing who their customer is.
I have a weird relationship with Harry’s. I love my Harry’s razor. I can’t tell you exactly why I like it more than Gillette, and if there are people here from Gillette, I’m really sorry. I keep a spare Gillette razor still, so don’t be too mad at me. But I have a relationship with my Harry’s razor. I feel somehow that they’re a kindred spirit with me. I don’t know why, but I do… and they know me.
My Casper mattress that I sleep on — same thing. Arrives in a box, it pops out, it’s so happy. I love it. I get a good night’s sleep. And, of course, my Allbirds, which I’m totally obsessed with. As soon as I walk in the house, I throw those on. They’re great.
But here’s the amazing thing. This obsession with authenticity and relevance and personalization — of knowing who we are — is spawning hundreds and hundreds of brands that start from a position of knowing. DTC brands have crossed the chasm. Because they start from a position of knowing who their customer is, they’re able to quickly move past simple demographics — simple notions of a funnel — to something that’s much more rooted in who you are, versus who they think you are. Identity underlies everything that the DTC experience brings.
Let’s talk about a few lessons I’ve gleaned from this world that I think are interesting in this context. The first is that DTC brands have flipped the marketing investment pyramid. I was taught and practiced throughout my career to focus on a funnel: Spend most of my money at the top, and very little money at the bottom. Time, attention, focus, thought, strategy — they were all at the top of the funnel, with very little at the bottom. I, in fact, put all my CRM people in the basement. Who else did that? All the people that did brand stuff, they got to see daylight. The quants were in the basement.
DTC brands get it right. They flip the pyramid. It’s a mindset first, but probably an investment strategy as well.
Our customers have taken these lessons to heart. At Signal, if you start from a position of knowing, like our customers do — where they’re actually connected one-to-one with their customers, when they can do [customer data] onboarding and identity resolution and get in front of that customer at the right moment — they can do things like replace acquisition with reactivation. They know who the customer is, and they know where their profits are gonna come from. Maybe that customer isn’t engaged with them lately. It’s reactivation versus acquisition… moving them through a shared wallet experience, upselling those customers.
What about suppressing a conversation? If you listen to Joanna, suppression is just as important as activation and conversation — knowing when not to talk to your customer. If you can’t turn a conversation off, you’re gonna annoy your customer. Well, if you aren’t connected to your customer, if you don’t know who they are and you’re literally not technically connected to them, you can’t turn the conversation off. So, suppression is really, really critical. And obviously, retention.
The next thing is evaluate your KPIs. I was trained to always optimize against CPM. I think the DTC brands, because they’re starting from a position of knowing, are optimizing for the action — for the interaction — instead. At Signal, our clients are taking a very forward-thinking approach to this. They’re looking to maintain this conversation in real time — not turn it into some abstract concept like a match rate, but turn it into a conversation.
The next thing you’ve gotta talk about is data. Not lists. We can all buy lists. You could buy lists since the 1960s. Today we buy them on computers instead of through catalogs, but it’s the same list. Move beyond the list. Go to your customer themselves, get them to declare that they’re interested, start that dialogue, get engaged: First-party first.
At Signal, one of the things that we talk to our customers about — and that I would encourage you to think about — is the difference between match rate and addressability. Too often, we’re trying to take a list and match it to another list and declare victory. That’s not a dialogue with your customer. Ultimately, addressability — all the way through the chain, both technically and practically and spiritually — is what’s going to make the difference.
Of course, what would a presentation at AdExchanger be without an Ariana Grande reference? Cookies, thank you — next.
And what I mean by that is, of course there’s a currency and a cookie or a [mobile advertising ID] and yes, eventually you have to go and link to those as objects. But are you centering your conversation around an email, or some other breadcrumb, that actually ties personally to an individual? That’s so, so important.
Why? Obviously, starting with the basis of an ID, versus a cookie or a MAID, is critical for that dialogue — for the technical connection — but most importantly, as [Federal Trade Commissioner Rohit Chopra] will tell you in just a few minutes, it’s important for notice, for choice, for maintaining the privilege of being able to speak to the customer. Cookies can’t declare notice and choice: People can. So maintain that connection for the practical aspect of better marketing performance, and for the very important aspect of wanting to be compliant — not just to the law, but compliant to the factor of being hyper-relevant and not annoying your customer.
Identity is the foundation. We want to reevaluate your KPIs, and real-time relevance allows you to do this. Be connected all the time to your customer. Let your buyers lead the way, not breathers. Accuracy will always trump reach in this new day and age. And finally, cookies, thank you — next. Maintain that breadcrumb of a real ID. Start with email. If you’re a brand steward here today, and you don’t have a strategy to create an identity graph with your customers to build that one-to-one technical connection, you’re not gonna be able to build a creative connection. You’re not gonna be able to build a dialogue with them.
I’ll end with this: Have a new year’s resolution built around identity. If it involves Signal, great. If it involves other companies, great. If you’re a company that is helping to lead this revolution, congratulations. It’s so important that all of us have a strategy around people, rather than cookies, MAIDs, demos and breathers. Be resolved. Do away with breathers, say yes to buyers, and you will all make your numbers this year. That I promise you.
Originally published February 01, 2019