Why advertising needs to get personalised
Today’s digital-first retail marketplace makes it tough for brands to stand out from the competition if they rely on the stalwarts of price and product range because transparency has made it easy for competitors to replicate offerings.
Some companies are successfully maintaining and building customer loyalty by offering personalised experiences. Google recently reported that best-in-class retailers are directing 30% or more of their revenue into curating personalised experiences, while average retailers are investing 0.7%. But what might be the reason for this discrepancy – and does it matter?
The changing regulatory landscape
Recent regulatory obstacles in the collection of customer data might explain why average retailers are not heavily investing in personalisation. Amid heightened public concern over consumer privacy in the latter half of the 2010s governments introduced regulations, including GDPR and the CCPA, to limit the use of consumer data.
Private companies quickly followed suit. In January 2020, Google announced its plan to phase out support for third-party cookies in Chrome within two years. Last year, Apple implemented new privacy measures that prevent apps and websites from tracking consumers online without their consent.
Why trust holds the key to personalisation
With these regulations and measures disrupting the status quo of data-driven marketing, if brands want to deliver personalisation at scale, then they need to build trust with their customers. The good news for brands is that consumers are willing to share their data if such a relationship exists. Research by the Global Data and Marketing Alliance, in partnership with Acxiom and the DMA UK, found that 47% of consumers are happy to exchange data with businesses if there is a clear benefit.
The onus is therefore on brands to create a defined and articulate value proposition for consumers to make them want to share their data, and this is something that the industry has struggled with in the past, according to Philippa Snare, senior vice-president, EMEA, at The Trade Desk.
“Consumers are rightfully protective of their data but they need to understand the role it plays in the value exchange that powers their free access to much of the internet.
“The problem is that publishers and advertisers have not done a good job at communicating the exchange where free content can be accessed if it is funded by personalised ads.”
Improving the user experience
Improving the user experience is one way that brands can create a compelling value proposition and deliver personalisation at scale. Despite the global surge in digital adoption during the pandemic, many consumers are dissatisfied with the digital experience offered by brands. This is particularly true in the retail sector, where research by McKinsey found that many digital users struggle to locate products within many brands’ existing digital channels.
Personalisation can address this issue. By using data, brands can improve the customer experience on their digital channels and direct consumers toward the products and services most relevant to them.
Thomas Walters is the founder and CEO of Billion Dollar Boy, a global creative influencer agency. He thinks that communicating the link between sharing data and a more tailored user experience should be at the centre of any conversation between a brand and its consumers.
He says: “Consumers want hyper-personalisation, they just might not realise it. Increasingly, new generations of consumers are at ease with sharing some of their data if it means a better user experience.”
But Walters notes that the emergence of a digital-first generation of consumers creates new challenges for brands, particularly to deliver content that is relevant and doesn’t disrupt the user experience.
“The trade-off only works if brands don’t abuse this trust and misuse information or issue poor quality, non-specific ads. At the same time, consumers are more aware of how valuable their data is to brands and the importance of data privacy and protection – especially for highly sensitive personal information.
“Advertising works best when it speaks to people’s wants, needs and desires in a way that aligns with their mindset and motivations at the time. If it doesn’t add value and make it worth the customer’s while, they could opt out through ad blockers, disengage from your brand or the platform, or boycott the brand altogether.”
Collecting the right kind of data
Along with building a consumer relationship based on trust, brands must accept that data alone doesn’t result in personalisation.
Many brands are often guilty of amassing substantial amounts of consumer data without checking if they are collecting the right data that enables personalisation. In some cases, these deep pools of data can hinder the scaling of personalisation, particularly if a brand doesn’t have the operational capabilities to sort through this data and link it with wider trends in consumer behaviour.
Laurence Dodds, planning partner at UM, says a lack of insights is often the barrier to delivering personalisation at scale.
“Brands often focus on the metrics they can accurately measure and don’t often look for more macro-behavioural insights.”
He adds: “With first-party data made up of thousands, sometimes millions, of data points, brands need to know how to successfully manage and activate this. Without the means to turn data into insight, brands are severely limited in their ability to understand their current customers and grow their prospective ones.”
Developing such internal capabilities takes time and resources and is often a challenge for brands. While it’s understandable that in such a challenging economic climate brands will want to see fast results from their personalisation campaigns, the truth is that they take time to get right and their value might not be immediately apparent.
Changing the internal team set-up
Dodds thinks that a big reason why personalisation campaigns take time to fine-tune is that they require brands to change their internal organisation.
“Organisations are more fragmented than ever and it’s often difficult to ladder up their thinking and make those more holistic decisions. Identifying customer problems best solved through personalisation can also take significant investment to solve over multiple years when the tenure of marketing staff is often less than two years. The result is that they pull easy levers and often don’t focus on significant investment of resources.”
Many companies are stuck in siloed ways of working that make delivering personalisation at scale nearly impossible. An agile, cross-functional team that features a mix of data scientists and marketing technology experts is necessary to achieve scalable personalisation.
But setting up this team doesn’t give brands licence to build a vast, multi-layered personalisation campaign at speed. Instead, brands should start small with a test-and-learn approach to their campaign, where each team member can share relevant but different knowledge at the same time to ensure they accurately manage and tweak any campaign based on real-time customer feedback.
Personalisation is fast emerging as not just the future of marketing but also how brands can stand out from their competitors and build relationships with their customers.