The Hidden Value of Acxiom’s LiveRamp

Acxiom recently spent a hefty $310M to buy LiveRamp, a company best known for its offline-to-online “data onboarding” service. But the real value of LiveRamp is its ubiquitous ID syncing network. LiveRamp has positioned itself as the switchboard of digital advertising — the router of marketing data across a hyper-fragmented ad tech ecosystem.

A Brief History of LiveRamp

Back in 2010, Facebook got a pretty serious slap on the wrist after inadvertently sharing personally identifiable information with third party data companies. In particular, a company called RapLeaf found a way to scrape referring URLs to match a cookie ID to a specific Facebook profile. Using this match, RapLeaf could target ads based on consumers’ Facebook profiles. Marketers loved it. Privacy advocates did not.

On the heels of that snafu, RapLeaf launched a secondary brand, LiveRamp, which would eventually become the face of the company. The LiveRamp service matched marketers’ offline CRM files with online cookie pools, enabling brands like Ford to deliver ads to drivers whose F150 leases were about to end. To make this work, LiveRamp built data transfer relationships with every major marketing platform — focusing initially on publishers and DSPs, and eventually expanding to a growing list of players in the data management, content marketing, and attribution spaces.

LiveRamp’s bet that data onboarding would be a valuable business proved to be correct, but the far bigger source of value would turn out to be a byproduct of the onboarding service — an ID syncing network that positions LiveRamp at the center of the highly fragmented ad tech ecosystem.

What is ID syncing?

For both technical reasons (every ad tech company operates on a different cookiespace) and privacy reasons (anonymous IDs should be rotated every few months), any real world person will have dozens, sometimes hundreds, of different online identifiers. Yahoo might call me user 1234, and Google might call me user 6789. Knowing that Yahoo’s user 1234 and Google’s user 6789 are the same real world person unlocks lots of interesting marketing use cases. With this match, marketers can:

  • measure total ad exposure for each consumer and impose a global frequency cap
  • syndicate audience segments to all publisher partners, creating consistent targeting parameters across the web
  • deliver sequential creative messages, telling a linear story to each consumer as he moves from awareness to intent
  • identify all brand exposures along each consumer’s path to purchase, enabling full-funnel attribution

In the context of a hyper-fragmented ecosystem, marketers often work with many different ad tech partners, and ID syncing enables these partners to operate as an integrated system.

How does it work?

Here’s where things get a little gnarly. Imagine that a brand works with 20 different ad tech companies. In order to create seamless operations, each company must know 19 corresponding IDs, and they must establish these 19 matches for every real world consumer.

By way of example, here is a URL that BlueKai can call to request TubeMogul’s user ID:

When you load that link in your browser, you’ll be redirected to a URL that looks something like this:

This URL notifies BlueKai that TubeMogul identifies me as user 6092720069689058834. With the first half of the sync in place, TubeMogul now needs to make a call back to BlueKai to request my BlueKai user ID. Similar two-way syncs need to happen for every pair of ad tech partners. Now do that for hundreds of millions of consumers. And keep the matches updated as each partner rotates its IDs. It’s a big job.

An alternative approach is to designate a single company to be the hub of all ID syncs. The hub can collect IDs from each participating ad tech partner and then form mutual ID syncs as needed. Think of this as a match maker who knows the full universe of eligible singles and can then introduce couples. LiveRamp has established itself as this match maker, and its ID syncing process looks something like this:

Hidden Assets

In hindsight, it’s clear that this match maker role is a coveted position in the ad tech ecosystem — a position that would eventually warrant an 11x revenue multiple. But it wasn’t so obvious when RapLeaf pressed the reset button in 2011 and launched LiveRamp. The bet to pursue a data onboarding service has proven to be a smart move. It enabled RapLeaf to move past its consumer privacy issues and build a new reputation as a connector of the online and offline marketing worlds. It unlocked new revenue streams, allowing LiveRamp to tap into CRM budgets, scale its business, and largely self-fund its growth. But through the process, LiveRamp also backed into becoming the de facto hub of ID syncing, the glue that holds together the ad tech ecosystem. This is the real value of LiveRamp, and it’s the reason Axciom made such a big bet on the company.