Personalized marketing

Last updated

Personalized marketing, also known as one-to-one marketing or individual marketing, [1] is a marketing strategy by which companies use data analysis and digital technology to show adverts to individuals based on their perceived characteristics and interests. Marketers use methods from data collection, analytics, digital electronics, and digital economics then use technology to analyze it and show personalized ads based on algorithms that attempt to deduce people’s interests. [2]

Contents

Technology

Personalized marketing is dependent on many different types of technology for data collection, data classification, data analysis, data transfer, and data scalability. Technology enables marketing professionals to collect first-party data such as gender, age group, location, and income, as well as connect them with third-party data such as click-through rates of online banner ads and social media participation.

Data Management Platforms: A data management platform [3] (DMP) is a centralized computing system for collecting, integrating and managing large sets of structured and unstructured data from disparate sources. Personalized marketing enabled by DMPs, is sold to advertisers with the goal of having consumers receive relevant, timely, engaging, and personalized messaging and advertisements that resonate with their unique needs and wants. [3] Growing number of DMP software options are available including Adobe Systems Audience Manager and Core Audience (Marketing Cloud) to Oracle-acquired BlueKai, Sitecore Experience Platform and X+1 [4] Customer Relationship Management Platforms: Customer relationship management (CRM) is used by companies to manage and analyze customer interactions and data throughout the customer lifecycle, improving relationships, boosting retention, and driving sales growth. CRM systems are designed to compile information on customers across different channels (points of contact between the customer and the company) which could include the company's website, live support, direct mail, marketing materials and social media. CRM systems can also give customer-facing staff detailed information on customers' personal information, purchase history, buying preferences and concerns. [5] Most popular enterprise CRM applications are Salesforce.com, Microsoft Dynamics CRM, NetSuite, Hubspot, and Oracle Eloqua.

Beacon Technology: Beacon technology works on Bluetooth low energy (BLE) which is used by a low frequency chip that is found in devices like mobile phones. These chips communicate with multiple Beacon devices to form a network and are used by marketers to better personalize the messaging and mobile ads based on the customer's proximity to their retail outlet. [6] Beacon technology circumference has shrunk, ultimately facilitating its use. [6]

Strategies

One-to-one marketing [7] refers to marketing strategies applied directly to a specific consumer. Having knowledge of the consumer's preferences, enables suggesting specific products and promotions to each consumer. One-to-one marketing is based on four main steps in order to fulfill its goals: identify, differentiate, interact, and customize. [8]

  1. Identify: [8] The focus is on getting to know the customers of a company, to collect reliable data about their preferences and how their needs can best be satisfied. Knowing a consumer's behaviors and habits allows a company to properly target them.
  2. Differentiate: [8] Involves distinguishing the customers in terms of their lifetime value to the company, knowing them by their priorities in terms of their needs, and segmenting them into more restricted groups. Ultimately, differentiating customers will help create a strategy targeted to those specific groups.
  3. Interact: [8] One needs to know by which communication channel and by what means, contact with the client is best made. It is necessary to get the customer's attention by engaging with him/her in ways that are known as being the ones that he/she enjoys the most. It is important to maintain an ongoing conversation when interacting with consumers, regardless of the time intervals in between.
  4. Customize: [8] One needs to personalize the product or service to the customer individually. The knowledge that a company has about a customer, needs to be put into practice and the information held has to be taken into account in order to be able to give the client exactly what he/she wants.

Goals

The goal of personalized marketing includes improving the customer experience by delivering customized interactions and offers, ultimately leading to increased customer loyalty. By understanding individualized consumer needs, a brand can create personalized ads and products that effectively target their desired consumers, fostering satisfaction. Personalized marketing aims to create consumer satisfaction, driving brand loyalty and repeat business. [9]

Costs and Benefits

Personalized marketing is used by businesses to engage in personalized pricing which is a form of price discrimination. Personalized marketing is being adopted in one form or another by many different companies because of the benefits it brings for both the businesses and their customers.

Described below are the costs and benefits of personalized marketing for businesses and customers:

Businesses

Prior to the Internet, businesses faced challenges in measuring the success of their marketing campaigns. A campaign would be launched, and even if there was a change in revenue, it was often challenging to determine what impact the campaign had on the change. Personalized marketing allows businesses to learn more about customers based on demographic, contextual, and behavioral data. This behavioral data, as well as being able to track consumers’ habits, allows firms to better determine what advertising campaigns and marketing efforts are bringing customers in and what demographics they are influencing. [10] This allows firms to drop efforts that are ineffective, as well as put more money into the techniques that are bringing in customers. [11]

Some personalized marketing can also be automated, increasing the efficiency of a business's marketing strategy. For example, an automated email could be sent to a user shortly after an order is placed, giving suggestions for similar items or accessories that may help the customer better use the product he or she ordered, or a mobile app could send a notification about relevant deals to a customer when he or she is close to a store. [12]

Customers

Consumers are presented with a wide range of products and services to choose from. A single retail website may offer a large variety of products, and few have the time inclination to browse through everything retailers have to offer. At the same time, customers expect ease and convenience in their shopping experience. In a recent survey, 74% of consumers said they get frustrated when websites have content, offers, ads, and promotions that have nothing to do with them. Many even expressed that they would leave a site if the marketing on the site was the opposite of their tastes, such as prompts to donate to a political party they dislike, or ads for a dating service when the visitor to the site is married. In addition, the top two reasons customers unsubscribe from marketing emailing lists are 1) they receive too many emails and 2) the content of the emails is not relevant to them. [13]

Personalized marketing helps to bridge the gap between the vastness of what is available and the needs of customers for streamlined shopping experience. By providing a customized experience for customers, frustrations of purchase choices may be avoided. Customers may be able to find what they are looking for more efficiently, reducing the time spent searching through unrelated content and products. Consumers have become accustomed to this type of user experience that caters to their interests, and companies that have created ultra-customized digital experiences, such as Amazon [14] and Netflix. [15]

Future of Personalized Marketing

Personalized marketing is gaining headway and has become a point of popular interest with the emergence of relevant and supportive technologies like Data Management Platform, geotargeting, and various forms of social media. Now, it is believed to be an inevitable baseline for the future of marketing strategy and for future business success in competitive markets.

Adapt to technology: Companies must adapt to relevant technologies in order for personalized marketing to be implemented. They may need to familiarize themselves with forms of social media, data-gathering platforms, and other technologies. Companies have access to machine learning, big data and AI that automate personalization processes. [16]

Restructuring current business models: Time and resources are necessary to adopt new marketing systems tailored to the most relevant technologies. Organized planning, communication and restructuring within businesses are essential to successfully implement personalized marketing. Personalized marketing prompts businesses to consider customer data and relevant outside information. Company databases are filled with expansive personal information, such as individuals' geographic locations and potential buyers’ past purchases, which raises concerns about how that information is gathered, circulated internally and externally, and used to increase profits. [17]

Legal liabilities: To address concerns about sensitive information being gathered and utilized without obvious consumer consent, liabilities and legalities have to be set and enforced. To prevent any privacy issues, companies manage legal hurdles before personalized marketing is adopted. [18] Specifically, the EU has passed rigid regulation, known as GDPR, that limits what kind of data marketers can collect on their users, and provide ways in which consumers can suit companies for violation of their privacy. In the US, California has followed suit and passed the CCPA in 2018. [19]

Controversies

Use of algorithms

Algorithms generate data by analyzing and associating it with user preferences, such as browsing history and personal profiles. Rather than discovering new facts or perspectives, one will be presented with similar or adjoining concepts ("filter bubble"). Some consider this exploitation of existing ideas rather than discovery of new ones. [20] Presenting someone with only personalized content may also exclude other, unrelated news or information that might in fact be useful to the user. [20]

Algorithms may also be flawed. In February 2015, Coca-Cola ran into trouble over an automated, algorithm-generated bot created for advertising purposes. Gawker’s editorial labs director, Adam Pash, created a Twitter bot @MeinCoke and set it up to tweet lines from Mein Kampf and then link to them with Coca-Cola’s campaign #MakeItHappy. This resulted in Coca-Cola’s Twitter feed broadcasting big chunks of Adolf Hitler’s text. [21] In November 2014, the New England Patriots were forced to apologize after an automatic, algorithm-generated bot was tricked into tweeting a racial slur from the official team account. [22]

Internet marketing

Personalized marketing has proven most effective in interactive media, particularly on the internet. A website has the ability to track a customer's interests and make suggestions based on the collected data. Many sites help customers make choices by organizing information and prioritizing it based on the individual's liking. In some cases, the product itself can be customized using a configuration system. [23]

The business movement during Web 1.0 leveraged database technology for targeting products, ads, and services to specific users with particular profile attributes. The concept was supported by technologies such as BroadVision, ATG, and BEA. Amazon is a classic example of a company that performs "One to One Marketing" by offering users targeted offers and related products. [24]

Other marketing

The term "one-to-one marketing" refers to personalized marketing behavior towards an individual based on received data. Due to its nature, "one-to-one marketing" is often referred to as relationship marketing. This type of marketing creates a personalized relationships with individual consumers. [25]

Difficulties

McKinsey identified 4 problems that prevent companies from implementing large scale personalizations: [26]

See also

Related Research Articles

Customer relationship management (CRM) is a process in which a business or another organization administers its interactions with customers, typically using data analysis to study large amounts of information.

Database marketing is a form of direct marketing that uses databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.

Personalization consists of tailoring a service or product to accommodate specific individuals. It is sometimes tied to groups or segments of individuals. Personalization involves collecting data on individuals, including web browsing history, web cookies, and location. Various organizations use personalization to improve customer satisfaction, digital sales conversion, marketing results, branding, and improved website metrics as well as for advertising. Personalization acts as a key element in social media and recommender systems. Personalization influences every sector of society — be it work, leisure, or citizenship.

The eCRM or electronic customer relationship management encompasses all standard CRM functions with the use of the net environment i.e., intranet, extranet and internet. Electronic CRM concerns all forms of managing relationships with customers through the use of information technology (IT).

<span class="mw-page-title-main">Digital marketing</span> Marketing of products or services using digital technologies or digital tools

Digital marketing is the component of marketing that uses the Internet and online-based digital technologies such as desktop computers, mobile phones, and other digital media and platforms to promote products and services. It has significantly transformed the way brands and businesses utilize technology for marketing since the 1990s and 2000s. As digital platforms became increasingly incorporated into marketing plans and everyday life, and as people increasingly used digital devices instead of visiting physical shops, digital marketing campaigns have become prevalent, employing combinations of search engine optimization (SEO), search engine marketing (SEM), content marketing, influencer marketing, content automation, campaign marketing, data-driven marketing, e-commerce marketing, social media marketing, social media optimization, e-mail direct marketing, display advertising, e-books, and optical disks and games have become commonplace. Digital marketing extends to non-Internet channels that provide digital media, such as television, mobile phones, callbacks, and on-hold mobile ringtones. The extension to non-Internet channels differentiates digital marketing from online marketing.

Artificial intelligence marketing (AIM) is a form of marketing that uses artificial intelligence concepts and models such as machine learning, Natural process Languages, and Bayesian Networks to achieve marketing goals. The main difference between AIM and traditional forms of marketing resides in the reasoning, which is performed by a computer algorithm rather than a human.

<span class="mw-page-title-main">Targeted advertising</span> Form of advertising

Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting.

Customer experience, sometimes abbreviated to CX, is the totality of cognitive, affective, sensory, and behavioral customer responses during all stages of the consumption process including pre-purchase, consumption, and post-purchase stages.

<span class="mw-page-title-main">Purchase funnel</span> Model of theoretical customer journey toward purchase of a good or service

The purchase funnel, or purchasing funnel, is a consumer-focused marketing model that illustrates the theoretical customer journey toward the purchase of a good or service.

idio Ltd. is an enterprise software company that produces and implements products for brands and publishers. To do so, idio uses its cloud-hosted platform, which incorporates modules for large-scale content aggregation and structuring, content analytics, multi-channel marketing automation, and customer insight generation. idio has offices in London and Exeter in the UK.

Customer value maximization (CVM) is a real-time service model that, proponents say, goes beyond basic customer relationship management (CRM) capabilities, identifying and capturing maximum potential from prospective and existing customers. Customer value maximization is about:

Marketing automation refers to software platforms and technologies designed for marketing departments and organizations automate repetitive tasks and consolidate multi-channel interactions, tracking and web analytics, lead scoring, campaign management and reporting into one system. It often integrates with customer relationship management (CRM) and customer data platform (CDP) software.

Oracle BlueKai Data Management Platform, formerly known as BlueKai, is a cloud-based data management platform which is a part of Oracle Marketing that enables the personalization of online, offline, and mobile marketing campaigns.

<span class="mw-page-title-main">Janrain</span> CIAM start-up based in Portland

Janrain, sometimes styled as JanRain, is a customer profile and identity management (CIAM) software provider based in Portland, Oregon, United States. It was established in 2002. Akamai acquired Janrain in January 2019.

The commercialization of the Internet encompasses the creation and management of online services principally for financial gain. It typically involves the increasing monetization of network services and consumer products mediated through the varied use of Internet technologies. Common forms of Internet commercialization include e-commerce, electronic money, and advanced marketing techniques including personalized and targeted advertising. The effects of the commercialization of the Internet are controversial, with benefits that simplify daily life and repercussions that challenge personal freedoms, including surveillance capitalism and data tracking. This began with the National Science Foundation funding supercomputing center and then universities being able to develop supercomputer sites for research and academic purposes.

A customer data platform (CDP) is a collection of software which creates a persistent, unified customer database that is accessible to other systems. Data is pulled from multiple sources, cleaned and combined to create a single customer profile. This structured data is then made available to other marketing systems. According to Gartner, customer data platforms have evolved from a variety of mature markets, "including multichannel campaign management, tag management and data integration."

Customeridentity and access management (CIAM) is a subset of the larger concept of identity access management (IAM) that focuses on managing and controlling external parties' access to a business' applications, web portals and digital services.

A data management platform (DMP) is a software platform used for collecting and managing data. DMPs allow businesses to identify audience segments, which can be used to target specific users and contexts in online advertising campaigns. They may use big data and artificial intelligence algorithms to process and analyze large data sets about users from various sources. Advantages of using DMPs include data organization, increased insight on audiences and markets, and more effective advertisement budgeting. On the other hand, DMPs often have to deal with privacy concerns due to the integration of third-party software with private data. This technology is continuously being developed by global entities such as Nielsen and Oracle.

<span class="mw-page-title-main">Oracle Advertising and Customer Experience (CX)</span> Cloud-based marketing service

Oracle Advertising and Customer Experience (CX) is a suite of cloud-based applications offered by Oracle Corporation that includes tools for advertising, marketing, sales, e-commerce, customer service.

A personalization management system (PMS) is an integrated software solution that enables users in an organization to manage and deliver personalized messages, campaigns, and interactive experiences to consumers across different communications channels and devices.

References

  1. ↑ Morgan, Neil A.; Whitler, Kimberly A.; Feng, Hui; Chari, Simos (January 1, 2019). "Research in marketing strategy". Journal of the Academy of Marketing Science. 47 (1): 4–29. doi:10.1007/s11747-018-0598-1. ISSN   1552-7824.
  2. ↑ Smith, J. (2020). "The Evolution of Personalized Marketing in the Digital Era". Journal of Marketing Technology. 15 (3): 45–60.
  3. 1 2 "What is a Data Management Platform, or DMP?". State of Digital Publishing. November 20, 2016. Retrieved November 30, 2017.
  4. ↑ "What Does a Data Management Platform Do, Anyway? - Martin Kihn". Martin Kihn. January 7, 2015. Retrieved May 2, 2016.
  5. ↑ "What is customer relationship management (CRM) ? - Definition from WhatIs.com". SearchCRM. Retrieved April 20, 2016.
  6. 1 2 Maycotte, H. O. "Beacon Technology: The Where, What, Who, How and Why". Forbes. Retrieved November 6, 2024.
  7. ↑ "What is one-to-one marketing? How it can help your business". Dynamic Video and Video Automation | Vedia. July 2, 2019. Retrieved May 8, 2020.
  8. 1 2 3 4 5 "Is Your Company Ready for One-to-One Marketing?" Harvard Business Review, January–February 1999, accessed July 27, 2011
  9. ↑ "Marketing Communications | Personalization In Marketing". marketingcommunications.wvu.edu. August 29, 2024. Retrieved November 21, 2024.
  10. ↑ Aridor, Guy; Yeon-Koo, Che; Hollenbeck, Brett; McCarthy, Daniel (2024). "Evaluating The Impact of Privacy Regulation on E-Commerce Firms: Evidence from Apple's App Tracking Transparency". CESifo Working Paper No. 10928.
  11. ↑ "Data Management Platforms Demystified" (PDF). Oracle.
  12. ↑ "Knowledge is Power - Data-driven Marketing Success is Built on Accountability" (PDF). Adobe Systems.
  13. ↑ "Online Consumers Fed Up with Irrelevant Content on Favorite Websites, According to Janrain Study | Janrain". Janrain. Retrieved April 20, 2016.
  14. ↑ "Real-time personalization and recommendation | Amazon Personalize | AWS". Amazon Web Services, Inc. Retrieved March 13, 2021.
  15. ↑ "Netflix: A Personalized Viewing Experience". Digital Innovation and Transformation. Retrieved March 13, 2021.
  16. ↑ "How to use AI to solve FMCG business problems using a recommendation for a Shopping List as a use case". ciValue. November 5, 2020. Retrieved April 26, 2021.
  17. ↑ "The Internet of Things". McKinsey & Company. Retrieved April 20, 2016.
  18. ↑ "The New Rules of Data Privacy". Harvard Business Review. February 25, 2022. ISSN   0017-8012 . Retrieved November 6, 2024.
  19. ↑ "How Brands Can Personalize at Scale". Gartner. Retrieved April 26, 2021.
  20. 1 2 "Infographic: The Problem With Personalized Marketing — The Content Strategist". The Content Strategist. January 25, 2016. Retrieved April 20, 2016.
  21. ↑ Woolf, Nicky (February 5, 2015). "Coca-Cola pulls Twitter campaign after it was tricked into quoting Mein Kampf". The Guardian. ISSN   0261-3077 . Retrieved April 20, 2016.
  22. ↑ "New England Patriots Accidentally Tweet Out a Racial Slur". AdWeek. November 14, 2014. Retrieved April 20, 2016.
  23. ↑ "Personalized Marketing". Psynso. Retrieved November 22, 2024.
  24. ↑ "Personalized Marketing". Psynso. Retrieved November 22, 2024.
  25. ↑ "Is Your Company Ready for One-to-One Marketing?". Harvard Business Review. January 1, 1999. ISSN   0017-8012 . Retrieved November 22, 2024.
  26. ↑ "Personalization at scale: First steps in a profitable journey to growth | McKinsey".
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.