Just like the ‘death of the cookie’, the news of personalisations’ demise may be somewhat of an overstatement. But there’s certainly a big shift happening.
Personalisation has been a hot topic in digital marketing for years. Back in 2019, I wrote an ebook on the subject, explaining that personalising the way you communicate with your audience influences how they feel about your brand, and therefore improves your customer experience.
But while customer experience is still a key component of marketing, Gartner is now predicting that 80% of marketers will abandon personalisation by 2025.
Personal data has long been the fuel that fires marketing at every stage of the customer journey, and the drive to find new forms of fuel and devise new ways to leverage them seems to be boundless,” said Charles Golvin, Senior Direct Analyst in the Gartner for Marketers practice. “However, this quest has failed to meet marketers’ ambitions and, in some cases, has backfired, as consumers both directly and indirectly reject brands’ overtures. Source.
This is a controversial statement among marketers. But maybe not one without merit.
Let’s dive deeper into what this all means.
Firstly, what do we mean by ‘personalisation’?
Global Head of Research at LinkedIn, Jon Lombardo, says on the Mi3 podcast that “personalisation is possibly the worst idea we have come across in digital marketing.”
At MP Digital, we don’t entirely agree with this statement. If Jon is referring to 1:1 personalisation, then yes, we agree – for reasons we’ll get into in this article. But personalisation in a broader sense (sounds counterintuitive, I know) still has a place in digital marketing.
Another name for the type of personalisation we believe Jon is referring to is hyper-targeting. Some digital marketers are obsessed with it – and digital publishers have done their best to take advantage of this by espousing the need to capture your exact audience at the exact right moment, arguing that mass methods of marketing such as TV and radio are wasteful and inefficient.
But the truth is, hyper-targeting can be more inefficient than “wasted impressions”. Not only does it drive up your costs, it limits your reach and excludes potential buyers.
Common personalisation pitfalls
Consumers have never been more spoiled for choice. While there are still powerhouse brands out there, the category monopolies and duopolies of latter years are becoming less common. This is thanks to the increasing number of locations and touchpoints available to reach your customers; there’s more opportunity for smaller brands to cut through and capture attention.
That being said, in order to actually win them you need a first-class customer experience, and the expectation around what a first-class experience looks like is only growing. It’s a given that a brand should know its customers, understand their wants and needs, and ultimately solve their problems.
So why would 80% of marketers who have invested in personalising their customer experience abandon their efforts?
There are a few reasons.
Low ROI
Like most trends, when personalisation was first being implemented its impact was huge. Brands saw a significant uplift in their campaign performance as customers were surprised and delighted by the uniqueness of their messaging.
And then they got used to it. The big jumps in performance began to flatten – and some businesses began to question whether it was worth the effort to continue. Where’s the ROI?
As customer expectation grows higher, it becomes harder and harder to impress. But it’s always easy to disappoint. Brands with good personalisation strategies that choose to abandon their efforts will be quick to understand its ROI in hindsight.
Resources
In the case of brands that haven’t implemented personalisation (or perhaps haven’t implemented it well), they may not have the resources available to do so. The reality is, good personalisation is resource-heavy – both in time, skill and technology.
Not only do you need to spend time understanding and defining your customer segments, you need to map out the various journeys these customers typically go upon when purchasing your products or services. This requires a great deal of skill from the marketer – and relies heavily on platforms that don’t come cheap.
Without the money for all three (and perhaps the perception of low ROI doesn’t help either), it’s easy to see why thoughts of personalisation can be quickly abandoned from the brands who fit within this pitfall.
Bad data
27% of marketers believe that data is the key obstacle to personalisation, revealing their weaknesses in data collection, integration and protection. Source.
Have you ever looked at the data Google or your social media apps have on you? You can view Google’s by going to myadcenter.google.com, while the social media apps you can usually find it within your app settings.
When I review my Google account, I can see that the company knows I’m female, between 25 and 34 years of age, and speak English. This is all information I’ve provided Google directly. But it’s also made some guesses at a bunch of different things. For example, it’s guessed I’m married, am a homeowner, work for a large corporation, and am blissfully child-free. Some of these things it has guessed correctly… others not so much.
And herein lies the problem: personalisation that relies on what effectively equates assumptions is never going to have a good ROI.
How to do personalisation right
Gartner has a number of recommendations for marketers who want to evaluate their personalisation efforts. These include:
- Leveraging a pilot with a vendor before locking in a personalisation tool to avoid premature investment.
- Building a roadmap that focuses on strategy, use cases and consent management.
- Collaborating with cross-functional teams to share insight and expand collective impact.
All great starting points to tackle the above pitfalls, especially around ROI and resources. But the key problem with personalisation still boils down to data.
First-party or don’t bother
Lombardo said on the Mi3 podcast that we’re not able to track and target people as well as we could a couple of years ago, ever since there were a few big data leaks and the general population started to wonder if their information was safe. This sounds like a bad new story for marketers, but Lombardo argues it’s actually a positive change as it means we have to rely more on first-party data.
For example, if I’ve told you I’m female, then feel free to segment me based on that information. If you’re relying on a third-party app telling you that I’m female, though, is it really a good idea to create a unique message for a segment that could be wrong? Especially when an academic study from MIT and Melbourne Business School determined that gender targeting is only accurate 42.3% of the time.
Stop being so ‘hyper’
This is where I want to talk about hyper-targeting once more, quoting Lombardo once more, as well as LinkedIn colleagues Global Director Jann Schwarz and Global Strategist Peter Weinberg. The trio put together a presentation on the future of B2B marketing, covering the “death of hyper-targeting”.
Think of targeting as a spectrum. On one end you have extremely broad targeting – everyone with a pulse on Planet Earth. On the other end you have super-niche targeting – CEOs at Fortune 10 companies. B2C is moving from the middle of the spectrum to the left, to go as broad as possible. B2B marketers need to move left as well, but not quite as far – from super-niche to pseudo-niche. Source.
Essentially, does it really matter if your consumer is male or female? In some cases it might, but what about those extra layers you’re also targeting? Think about your content – is there even a clear point of difference in the messaging for all these segments you’re creating?
Prioritise behaviour and values
At MP Digital, we sit firmly in the camp that believes it’s better to target based on values and behaviour rather than demographics. This is especially true when we look at marketing more from a brand building perspective and less from an activation point of view. Building a brand means building trust with your market – which doesn’t happen overnight.
So if your B2C audience is in their fifties, or your B2B prospects work in senior positions, wouldn’t it be better to first enamour them with your offering when they’re younger or more junior? Otherwise you may never make the consideration set in the first place when their decision-making time finally arrives.
What this means is those mass media TV and radio commercials aren’t “wasted” – provided you’re thinking about your potential customer’s behaviour.
Brands getting personalisation right
When done well, personalisation can make or break a company. Look at Netflix – the brand that spearheaded personalising our app experiences. When promoting its original series, Orange is the New Black, the company famously achieved worldwide success by identifying customer segmentation for viewership across similar shows such as Weeds.
Another is Jetstar, a brand that has incorporated personalised content as part of its email strategy for years. With at least 15 touch points from booking to travel experience, the company has created thousands of workflows that are triggered by first-party data and user behaviour (e.g. where are they going, is it for business or leisure?).
And then there’s Australian mattress brand Koala. The company personalised their paid media strategy by segmenting based on value propositions – rather than demographics data – understanding that almost everyone is a potential customer for a mattress at different stages of their lives.
The changing winds on privacy
The death of personalisation isn’t the only controversial marketing take that Gartner has had in recent years. Another is that the opt-out rate for mobile app tracking will decline from 85% in 2021 to 60% in 2023 as consumers gain experience with untargeted ads.
On top of this, 80% of consumers are more likely to purchase from a brand that provides a personalised experience, and over 60% of consumers would stop interacting with brands that provided poor personalisation tactics.
Consumers understand the value exchange of data for a more relevant, personalised experience and are willing to share.
All of this suggests that personalisation isn’t going anywhere – it’s just getting a makeover. As marketers, we need to take advantage of the two-way communication we can have with our customers, encouraging them to provide us with information and tailoring our content based on what they’re telling us – not on assumptions.
We also need to recognise that sometimes what’s different about everybody doesn’t really matter. What’s more important is what’s the same about everybody. Who cares if I’m male or female, or what my age is, if my values align with yours?