by Rick Erwin, CEO, Adstra
We have all witnessed the power of “black box” conditions in business. None of us can see, for example, our favorite airline’s pricing system, or our go-to search engine’s algorithm. After all, if we could see inside the black box, we might produce a better outcome for ourselves that the airline or search engine would see as worse for them.
When it comes to using identity for advertising and marketing, black boxes are the norm. Despite their ubiquity, these black boxes hold the entire industry back — from better ROI, better consumer relationships, and public trust.
These legacy practices don’t just slow us down — they waste precious budgets and leave brands flying blind in the most important channel of growth. Brands and their partners can take steps to give themselves transparency and control to produce better business outcomes. They should start with identity, where transparency and control have tremendous leverage on results.
Why Are There “Black Boxes” in Data and Identity?
Simply put, too many identity providers want to lock their customers into using their system, and they also prefer not to be held accountable for accuracy. On the buy side, many clients are satisfied with a simple match rate, and either don’t know how to gauge accuracy or don’t want (or need) to.
How is this possible, with billions of dollars spent on identity solutions every year? It comes down to two functions: matching and transcoding.
Let’s start with matching, the bedrock of targeting consumers and measuring results in digital media. Most identity use cases rely on sophisticated match logic that is invisible to clients. Onboarding a customer file requires matching, as does activating an audience at a DSP, as does measuring effectiveness by comparing an exposure file to conversion. Hence providers tout their match rate statistic, and clients often cite higher match rates as a reason for selecting one provider over another.
But was the match done correctly? Brands and their partners are usually prevented from knowing the answer, which lies in black box match logic.
The other black box trick is transcoding. This refers to the unique persistent ID that the identity provider assigns to each consumer record the client supplies. This should allow for privacy-safe universal data collaboration between brands and their partners, as you can share a file consisting of unique persistent IDs, without any identifying consumer information attached, and have it recognized by any other client of the same identity provider.
But it doesn’t work that way, because most identity providers assign a different unique identifier for the same consumer on different client files, and only the provider can translate between them. This is like renting a car, but every time you want to go from one location to the next, you must return to the rental agency and pay an additional fee depending on each new destination you travel to.
Both matching and transcoding are preventing clients from knowing what they are buying. This means that marketing departments don’t control their customer data and can’t collaborate cost effectively across the industry.
The Good News: Brands can Recapture Transparency and Control in Identity
As with many complex purchases, knowledge is power. Improved business outcomes are possible, provided brands know what to look at.
Begin with transparency.
Brands need to audit how identity matches are performed and should also be able to control the tightness or looseness of that logic for different use cases. They should be able to see a match confidence score for every consumer record they submit. Providers who will not allow visibility into their match logic are protecting a black box for the reasons we discussed earlier.
Now for data sharing. When done well, in a privacy-safe environment such as a clean room, collaboration unlocks enormous value for all parties involved. It should be easy and frictionless for brands and partners to do this. Yet there are a growing number of central “switchboards” where brands are charged each time and for each new collaboration partner. This transcoding practice only benefits the black box provider, and the entire industry should look for alternatives to this burdensome requirement.
Finally, brands should have full control of the definition of their customer and prospect identities within their own four walls. Black boxes obscure by handling identity resolution within their own technology environments, asking brands to trust that this expensive service is being performed well behind an opaque curtain.
A Simple Checklist for Better Identity
Black boxes will never fully disappear from marketing and advertising, but their dominance is a choice, not a destiny. Advertisers don’t have to accept opacity as the price of doing business. By demanding transparency in match logic, refusing to pay perpetual tolls for data collaboration, and insisting that identity resolution happen on our own terms, we can flip the model.
In an era where AI and data-driven decision-making will define competitive advantage, control of identity is not just a technical detail — it is the foundation of brand trust, marketing effectiveness, and customer loyalty. The brands that lift the lid on the black box today will be the ones leading the industry tomorrow.