Even the biggest advocates of personalized data say customizing content can backfire by appearing to stalk individuals while other observers maintain that personalized marketing may not achieve the results that brands expect.
In theory, targeted advertising is appealing because it only pitches content that is relevant to individuals. For example, there’s no point in pitching car advertisements to individuals who are too young to drive. Personalized content can also build customer loyalty, as illustrated by Amazon.com, which customizes its webpages and product recommendations based on its customers’ prior purchases and online searches.
Research also supports the appeal of customizing content. A study last year by Accenture Interactive found that 91% of consumers prefer to shop with brands that understand their preferences and provide personalized recommendations. Meanwhile, only 27% of individuals said they are concerned about brands being excessively invasive, according to The Parallax.
CMS WiRE, furthermore, reports that targeted marketing increases conversion and engagement by 10% to 14%. Yet, highly personalized content can be a double-edged sword because it can creep out consumers who feel that it is a result of brands stalking them.
Alison Chaney, who is chief digital training officer with Boot Camp Digital, which trains local businesses on how to use digital marketing, recently provided an example in a Tyler Morning Telegraph article.
While traveling in Miami, she received a phone alert explaining that a friend of hers had eaten at a nearby restaurant and had enjoyed the experience. For Chaney, the intrusive nature of the alert was super creepy.
To avoid creeping out prospects, brands need to walk a fine line between using data to understand consumers’ interests, while not going overboard. In the CMS WiRE article, Clair Belmonte of Belmonte Marketing, suggests that brands refrain from using personalized data with prospects that they haven’t contacted within the past three months.
Brands should also refrain from using data that isn’t essential for a consumer’s experience. As an example, if a brand wants to pitch a new telephone system to a company with 57 employees, it can simply propose providing the new equipment rather than including a headcount of workers in its sales pitch.
Yet, other marketers say the value to brands, or at least to publishers, of providing highly customized advertisements or emails is questionable. The New York Times canceled its behavioral targeting of advertisements and use of advertising exchanges in Europe to avoid risking a violation of the Global Data Protection Regulation, reports DIGIDAY. It instead provides contextual advertising, which displays advertisements based on articles that viewers have just clicked on rather than using details based on lengthily histories of individuals’ web activities.
After making the changes, the publication experienced a significant increase in advertising revenue. Non-tracking search engine DuckDuckGo is another example. It serves keyword-based advertisements and has been profitable since 2014, which is when it stopped profiling users, reports Tech Crunch.
More recently DuckDuckGo received $10 million in venture capital funding from a pension fund that expects online privacy concerns to hit an inflection point, which would then benefit search engines that don’t track users’ activities.
Tech Crunch also points to research by Carnegie Mellon University professor of IT and public policy, Alessandro Acquisti, who has found that the costs of targeting advertising for brands are considerable. However, broadly speaking, publishers only increase their revenues by 4% for the services when compared to contextual advertising.
He also adds that a lack of transparency makes it hard to assess the success of personalized data and he notes that Facebook has previously acknowledged making mistakes when reporting engagement data.
It’s not surprising that the industry is grappling with questions regarding the merits of personalization when considering that the use of tracking data and related technologies is still evolving. Over time, it’s likely that the industry will develop best practices for personalized marketing.