Where data-driven insights are the linchpin of effective retail marketing, an identity (ID) graph has become indispensable. They help retailers piece together identifiers like emails, phone numbers, and device IDs into a cohesive, accurate customer view. With the raise of Retail Media, operating an actionable ID graph is more valuable than ever.

However, there is a choice: Should retailers buy a third-party ID graph or create their own in-house?

The answer is simple: relying on third-party ID graphs is flawed, limiting, and costly. Retailers should invest in building and managing their own ID graphs for total control and long-term success. Let’s break down why.

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The Hidden Costs and Limitations of Third-Party ID Graphs

Buying a third-party ID graph might seem like the easy option—fast setup, immediate insights. But beneath the surface lies a flawed approach that can undermine your business goals:

• You Don’t Really Own the Data: When you buy a third-party ID graph, you don’t truly own the data. Your access is temporary, controlled, and often requires you to pay for each use or activation. This dependency on an external vendor limits flexibility and ties your success to their terms.
• Lack of Data Privacy Control: Third-party graphs often aggregate data across multiple clients, sharing customer identifiers without your full control. This practice raises significant privacy concerns and risks violating regulations. Are you really comfortable letting someone else decide who accesses your customers’ data?
• High Costs, Questionable Returns: With third-party graphs, costs add up quickly—and often without corresponding benefits. Retailers are required to pay to activate their own first party data. If you are using a bough graph because you want incremental match rates, ok, but retailers shouldn’t pay for what they can already reach or for data that doesn’t significantly enhance insights.
• Unreliable Data Quality: The accuracy of third-party ID graphs depends on update frequency and quality—both of which can be inconsistent. When you rely on someone else’s data, you risk gaps and inaccuracies that lead to poorly targeted campaigns and missed opportunities.

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The Benefits of Building an In-House ID Graph

Creating your own ID graph is the only way to ensure full control, flexibility, and meaningful insights. Here’s why building your own is worth it:

• Complete Ownership and Total Control: By building your own ID graph, you own your data outright. You decide how it’s collected, updated, and activated—no middlemen, no extra fees. Ownership means you can scale your data strategy at your own pace, without anyone else calling the shots.
• Superior Customisation for Richer Customer Insights: An in-house ID graph isn’t limited to stitching together identifiers. You can add behavioural data, building customer profiles that reflect preferences, purchase history, and engagement. This capability drives highly relevant, targeted campaigns that turn prospects into loyal customers.
• Cost-Effective, Sustainable Advantage: Unlike third-party solutions that charge for every activation and update, an in-house graph provides ongoing value with far fewer surprises. You’re investing in your infrastructure, not someone else’s bottom line—yielding a far better return over time.
• Privacy Control Builds Customer Trust: In-house ID graphs allow you to manage customer data in line with your own standards, staying compliant with regulations and maintaining customer trust. In an era of increasing privacy scrutiny, controlling how data is handled is a must—not a nice-to-have.

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How Retailers Can Start Building Their Own ID Graphs

The idea of building your own ID graph might sound daunting, but the process is more accessible than you might think:

Centralise First-Party Data: Collect customer data from every touchpoint—online, in-store, through loyalty programmes, apps, and more. Your existing customer data is your most valuable asset, and centralising it is the first step to building a powerful ID graph.

Focus on Deterministic Matching: Directly link identifiers like email addresses, phone numbers, and loyalty IDs. Deterministic matching creates reliable, precise profiles—the backbone of effective personalised marketing.

Enhance with Additional Identifiers: Extend your reach by integrating device IDs or partnering with Unified ID providers. These extensions add depth and breadth to your graph without losing control.

Leverage a Customer Data Platform (CDP): Implement a CDP to act as the central hub for your ID graph. A CDP can help unify data, create actionable insights, and ensure data governance and privacy standards are always met.

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An owned ID graph is a competitive advantage

The deprecation of third-party cookies marks a seismic shift in how brands can target customers. First-party data is now the key to survival—and thriving. Owning your ID graph means owning your future, while competitors who stick with bought data will struggle to adapt. A private, well-maintained ID graph isn’t just a marketing asset; it’s a competitive advantage that will only grow in value.