eMarketer Webinar: The Future of Digital Identity

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August 6, 2015 The Future of Digital Identity Made possible by Bryan Yeager Analyst © 2015 eMarketer Inc.

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Digital Identity Today © 2015 eMarketer Inc.

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A messy, fragmented landscape © 2015 eMarketer Inc.

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Broad digital footprint, myriad identity contexts >23 the average number of online accounts held by US internet users as of March 2015 3.5 shopping accounts 3.1 financial accounts 2.8 email accounts 2.7 entertainment accounts Source: TeleSign © 2015 eMarketer Inc.

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Challenges with digital identity today  Balancing value vs. risk when it comes to consumers providing digital identity data  Establishing trust when many forms of digital identity are self-asserted by consumers  Delivering relevance and context in the customer experience with scattershot signals, identifiers © 2015 eMarketer Inc.

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Fraud and identity theft are key risks of digitization of identity © 2015 eMarketer Inc.

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Many people have experienced identity theft 47.4% 2 in 5 US internet users that had to replace their credit card 1-2 times due to loss or data being compromised US internet users received a notice about compromised personal information (TeleSign, March 2015) (Avangate, Sep. 2014) © 2015 eMarketer Inc.

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Balancing convenience and security “I think consumers are increasingly sensitive to identity-system fraud. If they feel that they’re at risk, they’re going to either completely stop the application online or take their business to a competitor who’s doing it better. … They want convenience and ease of use, but they also want privacy and security.” —Kimberly Little Sutherland, senior manager of identity management strategy at LexisNexis Risk Solutions © 2015 eMarketer Inc.

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Data security is a top factor that influences how willing internet users are to share their personal information with companies © 2015 eMarketer Inc.

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US internet users claim in surveys that they want more control over their personal info 74% believe it’s very important to be in control of who can get info about them. (Pew Research Center, Feb. 2015) 65% believe it’s very important to be able to control what info is being collected. (Pew Research Center, Feb. 2015) 50% feel they have not much or no control at all over the collection of their personal information. (Pew Research Center, Sep. 2014) © 2015 eMarketer Inc.

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Desire, resignation about control over personal data collection for marketing purposes © 2015 eMarketer Inc.

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But… © 2015 eMarketer Inc.

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Clear incentives like promos and discounts are most effective in coaxing US internet users to share data with companies Getting help with decision-making, troubleshooting are also contributing factors © 2015 eMarketer Inc.

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There will be 196 million more US smartphone users in 2019 than there were in 2009 US Smartphone Users (Millions, % of Total Population) eMarketer, July 2015 © 2015 eMarketer Inc.

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Close to half the US population is already on Facebook, rising to more than half in 2019 US Facebook Users (Millions, % of Total Population) eMarketer, July 2015 © 2015 eMarketer Inc.

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7 in 10 people in the US will be digital buyers by 2019 US Digital Buyers (Millions, % of Total Population) eMarketer, June 2015 © 2015 eMarketer Inc.

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US retail ecommerce sales will exceed half a trillion dollars by 2019 US Retail Ecommerce Sales (Billions, % of Total Retail Sales) eMarketer, June 2015 © 2015 eMarketer Inc.

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And a growing proportion of those sales will be coming from mobile devices US Retail Ecommerce Sales by Device (Billions) 1% 22% 27.5% eMarketer, June 2015 © 2015 eMarketer Inc.

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And tens of millions of US adults regularly access sensitive financial accounts on their phones US Mobile Banking Users (Millions, % of Adult Population) eMarketer, August 2015 © 2015 eMarketer Inc.

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Consumers ultimately want convenience with minimal friction “The consumer unfortunately wants to do as little work as possible to take some of that control into their own hands. … How do we get the consumer to take more actions using the tools that are currently available to them, and what can we possibly do to at least take some of that decision-making out of their hands in a way that they would appreciate?” —Keir Breitenfeld, VP of product strategy for fraud and ID at Experian Decision Analytics © 2015 eMarketer Inc.

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Digital identity is the core element of digital commerce, including payments and experience “One of the biggest challenges that business owners have when they sell an item [online] is to trust that the person who wants to buy it is who they say they are.” —Carey Kolaja, VP of global consumer products at PayPal “You have the security team that, historically, has had to go to bat against the product organizations in these web businesses to add more security. But by adding more security, you’re adding more clicks, more time, more user friction.” —Brett McDowell, executive director of The FIDO Alliance © 2015 eMarketer Inc.

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Digital payments are among the riskiest to accept, resulting in revenues lost to fraud  One-third of US companies selling online lost 1% to 5% of ecommerce revenues to digital fraud  One in 10 lost 36% to 50% of ecommerce revenues to digital fraud (TeleSign/RSA, Dec 2014) © 2015 eMarketer Inc.

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Two approaches to shoring up security and establishing trust in digital commerce Tokenization Big Data Analytics © 2015 eMarketer Inc.

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The marketer’s view: different digital identities across devices for the same person © 2015 eMarketer Inc.

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Consumer behaviors create identity gaps for marketers 59% of US internet users have ever cleared cookies and browser history. (Pew Research Center, Sep. 2014) 57% of US internet users have refused to provide info that wasn’t relevant to the related transaction. (Pew Research Center, Sep. 2014) 46% of worldwide internet users have used a private browsing window in the past month. (GlobalWebIndex, Q1 2015) © 2015 eMarketer Inc.

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Challenges with merging fragments of profiles, collecting data across channels a symptom of identity gaps © 2015 eMarketer Inc.

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The ‘cross-device graph’ concept attempts to connect the dots of identity for marketers “In most examples of a cross-device graph, you have the ability to link cookies and devices together so you can track where a consumer may be exposed to a mobile ad campaign. … If you want to associate that consumer’s offline sales transactions with their desktop and mobile media exposures, that’s going to be tougher unless you’re able to bridge that gap and get some kind of linkage to the offline identity.” —Michael Schoen, VP of marketing services at Neustar © 2015 eMarketer Inc.

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Social logins aim to reduce user friction, improve digital identity management © 2015 eMarketer Inc.

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Facebook dominates social logins, as users seek easier ways to access digital services Most popular for ecommerce + overall Top reasons US internet users use social logins 1. Don’t want to spend time filling in registration forms (56%) Used in media category the most 2. Don’t want to create and remember another username, password (43%) Used in travel category the most 3. Like being able to use the same identity on all devices, websites (25%) (Gigya, Q1 2015) (Gigya, Apr 2015) © 2015 eMarketer Inc.

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Digital Identity Tomorrow © 2015 eMarketer Inc.

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The future is already here Image Credit: Bob Croslin, Wired.com © 2015 eMarketer Inc.

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10 million F people had tried Disney World’s MagicBands as of April 2015 ▼30% turnstile transaction time reduced since the launch of MagicBands 5,000 more people can experience the park at the same time Image Credit: Disney via Fast Company © 2015 eMarketer Inc.

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Mobile: a convergence point for identity? © 2015 eMarketer Inc.

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Emerging technologies could enable persistent, authenticated digital identity Biometrics Wearables Internet of Things © 2015 eMarketer Inc.

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A real-world future scenario © 2015 eMarketer Inc.

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Technology can bridge physical identity with digital identity “I think [digital] identity needs to be close to the person. A wearable could identify the person when they interact with a computer, a phone, a home, a car and more.” —Jonathan Schler, chief scientist at Sizmek © 2015 eMarketer Inc.

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Biometrics: digitizing unique physical traits to confirm you are who you say you are Prominent biometric ID methods:  Fingerprint scanning  Voice recognition  Facial recognition  Vein recognition  Iris/retina scanning  Heartbeat measures  DNA © 2015 eMarketer Inc.

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Digital identity: the killer app for wearables? 64% of US smartphone owners not likely to purchase a wearable device because they don’t see the need to own one (Chadwick Martin Bailey, April 2015) © 2015 eMarketer Inc.

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The burgeoning Internet of Things market US sales of connected home technologies to reach $967 million in 2015. (Consumer Electronics Association, July 2015) 223 million connected smart home appliances to be sold worldwide in 2020, up from 1 million in 2014. (IHS, July 2015) Worldwide sales of IoT-enabled products to reach $1.7 trillion by 2020. (IDC, June 2015) © 2015 eMarketer Inc.

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Points of integration for the Internet of Things Connected/smart-home devices that internet users in North America are likely to purchase 1. Connected home camera (37%) 2. Connected thermostat (37%) 3. Connected lighting (34%) 4. Connected door lock (34%) 5. Smart-home hub (32%) (Icontrol Networks, April 2015) © 2015 eMarketer Inc.

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CMOs expect IoT and wearables to have big impact on marketers by 2020 © 2015 eMarketer Inc.

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IoT, wearables bring new dimension to mobile challenges marketers deal with “Anything that was built to solve just mobile devices is going to be different than what you have to use to solve for thermostats or for cars or for wearables. As a brand or technology company, you have to figure out, ‘How do I ingest this information and find things that are meaningful enough in this to connect and understand who this consumer is?’” —Martin Gilliard, general manager of Americas for AdTruth, an Experian Marketing Services company © 2015 eMarketer Inc.

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Shifting mindsets as consumers go from having five or 10 connected devices to owning hundreds “I think when you look a bit further out, cross-screen doesn’t become cross-screen anymore—it’s cross-everywhere. Every system interacts with the user, especially if you think about the internet of things.” —Jonathan Schler, chief scientist at Sizmek © 2015 eMarketer Inc.

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Amazon Dash buttons: connecting buyers with brands, products with the click of a button  Wi-Fi-connected, branded “replenishment device” that places an order when button is pressed  Setup via Amazon mobile app to connect to network and specify the product and order quantity to place for pressing button  Push notification via mobile app when order is placed via button  Leverages identity established with Amazon, including payments, address, past successful orders and Prime status Image Credit: Amazon © 2015 eMarketer Inc.

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Benefits of IoT tech needs to be clearly communicated to allay perceived consumer privacy concerns © 2015 eMarketer Inc.

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Key takeaways Digital identity today is a fragmented, messy landscape with challenges around balancing value vs. risk, communicating trust and delivering relevance and context. Cross-device measurement tactics and social logins are a few ways these issues are being addressed. Digital identity tomorrow could rely on a combination of mobile devices like smartphones and wearables, as well as biometrics and the internet of things to converge and simplify today’s identity ecosystem. But companies have to show consumers value to make the future a reality. © 2015 eMarketer Inc.

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AGE OF EMPOWERED CONSUMERS Copyright © 2015 Neustar, Inc. All Rights Reserved

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MARKETERS MUST BRIDGE THE GAP Over 70% of consumers will not respond to offers/messages if irrelevant Source: IBM Copyright © 2015 Neustar, Inc. All Rights Reserved Only 17% of marketers tailor their offers or messages to the individual

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WHY IS IDENTITY SO HARD? Dynamic and Scarce Data Makes Identification Essential 45M Consumers change their phone numbers 16M Consumers’ households relocate 2.1M People legally change their name 78% 30% 2000 2013 Publicly available information for U.S. households has declined Copyright © 2015 Neustar, Inc. All Rights Reserved Complex Buyer Journey Lines between offline and online are blurring Connecting the Dots a Real Challenge

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NEUSTAR BRIDGES THE GAP WITH PERSISTENT IDENTITY ACROSS CHANNELS Build Rich Customer Profiles Persistent Identity Campaigns Analytics Copyright © 2015 Neustar, Inc. All Rights Reserved Analyze and Optimize

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NEUSTAR OFFERS AN INTEGRATED MARKETING SUITE UNDERPINNED BY EXTENSIBLE IDENTITY Market Analytics & Segmentation Onboarding Accuracy Targeting Customer Interaction Management Scale Measurement Depth NEUSTAR IDENTITY Copyright © 2015 Neustar, Inc. All Rights Reserved SOLUTIONS Attribution Leverage & own your data to market with precision Bridge online & offline worlds and personalize your dialogue Analyze & optimize across channels and devices NEEDS

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Q&A Session The Future of Digital Identity Learn more about digital marketing with an eMarketer corporate subscription Around 200 eMarketer reports are published each year. Here are some recent reports you may be interested in:  Digital Identity: How Tomorrow's Connected Life Could Help Solve Today's Fragmentation Issues Bryan Yeager You will receive an email tomorrow with a link to view the deck and webinar recording. Made possible by  Cross-Device Targeting: Success Hinges on Device Identification Methods  Mobile Audience Targeting: Have Industry Advances Raised Advertisers' Confidence Levels?  Mobile Wallets: Six Things Marketers Should Know  Marketing Technology: Nine Important Trends for Brands and Agencies in 2015 To learn more: www.emarketer.com/products 800-405-0844 or webinars@emarketer.com © 2015 eMarketer Inc.

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