An impressive 80% of consumers are more likely to make a purchase when a brand offers a personalized advertising experience, 90% of U.S. consumers find personalized marketing content somewhat to very appealing, and 99% of marketers say personalization helps advance customer relationships. With such a strong consensus, it’s safe to say that personalization has never been more in demand by brands and audiences alike.
Personalization used to be as simple as a barista remembering your order. Now, thanks to today’s technology, it spans everything from personalized messaging to custom product recommendations, ad targeting, dynamic website content, and more. In this article, we take a closer look at the world of personalization—its value for businesses and audiences, concrete examples and methods, ways to measure success, and how to find the personalization sweet spot between a pleasant surprise and a step too far.
What is personalization?
Personalization is the process of tailoring a person’s experience or content based on information a company has learned about the person. If you’ve received an email with your name in the subject line or have seen an ad for pizza after you made a late-night visit to the Domino’s Pizza website, you’ve experienced personalization.
The following are just a few common examples of personalization.
Personalized messaging allows a brand to tailor messages using a specific consumer’s information, such as their first name, location, interests, or past purchases.
For example, an online retailer may send you an email nudging you to come back to complete a purchase if you’ve left items in your shopping cart. Or, a musician you like may send you an email highlighting concert dates relevant to your city and state. Athletic event company Spartan Racing applied this personalization tactic to its events and found that it led to a 50% increase in website traffic, a 25% increase in new users, and a 13% increase in conversions.
Many marketing automation platforms (such as MailChimp, HubSpot, and Marketo) and ecommerce platforms (such as Shopify or Kajabi for online courses) can personalize messages using merge tags to dynamically insert a recipient’s first name, email address, phone number, city, state, or other identifying information.
Marketing automation platforms and ecommerce sites also typically offer audience segmentation to divide a large audience into smaller groups by information such as location, buyer interests, past purchases, or email behavior (like whether they opened a previous email). Segmentation helps increase message relevance and, therefore, the likelihood of engagement.
Below are a few more examples of personalized advertising messaging in action.
In the email above, coffee e-commerce company Four Sigmatic sent an email with the subscriber’s name in the subject line. This strategy delivers an impressive result for how simple it is; studies show that emails containing names in their subject lines are 26% more likely to be opened.
Know Your Customer
Four Sigmatic could have further personalized this email through segmentation if they knew a few identifiers about this user, such as whether they considered themselves an on-the-go person, favored plant-based foods, or had previously purchased protein products before. All of these would make the likelihood of the buyer taking action from Four Sigmatic’s personalization even higher.
Next, in the example above, editing app and plugin Grammarly takes personalization a step further. By analyzing data on each writer’s technique (such as use of ellipsis, comma, verbs, and so on), Grammarly sends weekly reports about how each user’s writing has improved. This not only gamifies using the app for consumers, but it discreetly shows the value of Grammarly, making it more likely for people to not only open Grammarly’s emails, but to keep using the app.
Personalized Advertising Targeting
Ad targeting is another form of personalization. A brand uses ad targeting to advertise to consumers based on their demographics, buying history, or behavior (such as browsing certain products or web pages).
Brands can either use ad targeting to advertise to completely new audiences (for example, by targeting those likely to make a purchase with the brand based on demographic data) or by targeting those who have previously visited the brand’s website. For example, if you’ve browsed online for a marketing software company and then you see banner ads for that company dozens of times over the next several days, that’s ad targeting in action.
Typically, marketers set up targeting parameters when designing their ads on advertising platforms such as Facebook, Instagram, or Google. Depending on the business’s sophistication and budget, they may also work with targeting software such as Madgicx, Centro, or Choozle, which help automate ad targeting and optimization.
Below are a few more examples of personalized ad targeting in action.
Many retailers use dynamic ad retargeting, where they automatically serve ads to shoppers based on products they previously viewed on the e-commerce site. In the example above, e-commerce retailer Shopbop delivers a display ad to a shopper on another website across the internet, based on products they previously shopped on ShopBop.
Metrics of Customized Displays
Studies show that, on average, retargeting ads are 76% more likely to be clicked on than regular (non-retargeted) display ads. Shopbop takes their strategy one a step further by showcasing a compelling offer to “save up to 25% using the code INTHEFAM” on the left-hand side. By showing both personalized outfits that a shopper has already demonstrated interest in, as well as an incentive to take action right away, Shopbop increases the likelihood of the shopper returning to their site.
Additionally, in this next example, the grocery subscription box Misfits Market targets Facebook users with Facebook ads based on user location. As you can see in the opening line of their ad, Misfits Market highlights that they are now available in select Texas zip codes. They also personalize a coupon code, TX15, which makes users feel like they have a special code just for them based on their location. This helps Misfits Market better keep track of where their conversions come from while also incentivizing shoppers to take action while they still have the ad on their screen.
Product recommendations are another form of personalization. A brand may advertise (or “recommend”) products that it suspects a consumer may like based on demographics, buying history, or behavior.
For example, when you visit the Amazon website, you’ll notice the homepage shows various products that Amazon thinks you might be interested in. When you look at a specific product on the site, you’ll see recommendations at the bottom of the page featuring related or similar products other shoppers considered.
Accurate product recommendations typically rely on software that analyzes copious amounts of customer data to make suggestions. Some popular software systems include YouChoose, Recolize, Baynote, Qubit, and Unbxd.
Below are a few more examples of personalized product recommendations in action.
In the example above, furniture and accessory retailer Atkin and Thyme recommends products that would complete a room. They based this on furniture a shopper is browsing. Atkin and Thyme isn’t offering alternate furniture examples, as Amazon does above with the books. Rather, they suggest smaller items that would complement the larger pieces a buyer is interested in. Atkin and Thyme found that this strategy helped increase average order value by 6.5%. This strategy is a win for consumers because it acts as a virtual interior designer. Additionally, it helps them quickly and easily find pieces to complete their room design. This strategy also benefits Atkin and Thyme, increasing average order value and consumer enjoyment of their site.
Similarly, in the example above, plus-size retailer Avenue provides a feature on the side of their cart page recommending other products that people purchased when they had similar items in their cart. Once a buyer is already ready to make a purchase, last-minute personalized recommendations can be an easy last-minute add—thereby increasing average order value.
Lastly, dynamic websites are another popular use of personalized media. A dynamic website displays content based on a visitor’s buying history or past behavior on the site.
Examples of popular dynamic websites include Amazon (for the reasons just mentioned), Netflix (which makes unique recommendations for every user on the account), or Nike (which shows offers based on the user’s country).
Dynamic websites are usually built with a customer management system and a specific computer coding language. Tools such as Adobe XD, Mockplus, Template Toaster, and Sketch help developers create dynamic websites based on mouseover history or buyer history.
Below are a few more examples of dynamic websites in action.
Global payment processor PayPal uses a dynamic website to personalize its messaging based on location. For example, if a website visitor is in Mexico, PayPal automatically translates its messaging to Spanish. Many larger websites serving international audiences (such as large banks and retailers) automatically do this.
Language Customization Matters
The sites typically not only automatically translate messaging but even money or prices into local currencies. Imagine the confusion for consumers if they didn’t do so! Dynamic websites create a much more seamless experience for customers and the businesses serving them.
Lastly, as you can see in the example above, international vacation rental company Airbnb dynamically changes its recommendations based on a user’s location. Airbnb provides the driving distance of nearby cities so that a user can browse rental vacation properties close to them. This not only gives the consumer new ideas about where to travel, but it removes the barrier of a customer having to pay for a flight or get overwhelmed booking faraway travel. This makes consumers more likely to book a weekend getaway with Airbnb and simplifies the booking experience for consumers. A classic win win.
Personalization doesn’t end with the approaches explored in this article. Brands are becoming ever more clever with their personalization strategies. For example, Spotify tailors playlists based on past listening habits. Instagram creates shareable posts featuring a user’s top photos of the year. Coca-Cola increases revenue by emblazoning its bottles with popular names. Artificial intelligence (AI) is opening up a new level of personalization. Machine learning develops sophisticated algorithms that return billions of dollars each year in customer retention and acquisition.
Value of Personalization for Businesses and Consumers
As you can see in the examples above, both businesses and consumers benefit from personalization when done strategically.
Businesses aim to gain customers and increase revenue, engagement, and customer satisfaction using personalized advertising.
While, for consumers, personalized media shows its value through targeted content, helpful recommendations, and tailored entertainment. Dale Carnegie said, “Remember that a person’s name is to that person, the sweetest and most important sound in any language.” People like to feel special. They are delighted to see their name in print, and share their top photos with friends. Even more, they love when a business remembers their order. When done skillfully, personalization accomplishes these objectives.
Skillfully is the keyword. There’s a fine line between helpful and hair-raising, constructive and creepy. Identity theft and data hacks are ever on the rise. Consumers value privacy and are typically comfortable allowing a brand to use their information under two conditions. First, they’re aware they provided information to the brand. Second, they’ve given their consent for the brand to use their information. You may have access to more data than the average consumer is aware of. For that reason, it’s best to err on the side of caution. Consider the following questions to gauge whether your brand’s personalization strategy strikes the right balance.
Advertising Personalization Considerations
- Would the consumer find this helpful? If they’d find product recommendations useful, even if you make recommendations based on past behavior, then you’re in the clear.
- Would the consumer feel like their trust or privacy has been violated? Your website may store more cookies than you know what to do with. If a consumer feels watched, tracked, or monitored, you’re likely going too far.
- Would the consumer like the brand more or less as a result? Ultimately, that’s really what matters. Personalization isn’t doing you any favors if it makes a consumer like or trust you less.
- How would you feel about this as a consumer? You may work for a business, but you’re also a consumer of content, products, and services. If you’d find the personalization helpful, you may be on the right track. But if it would make you feel uncomfortable as a consumer, it may be best to reconsider your approach.
Measuring the Success of Personalization
A few key factors can help a brand measure whether personalized media is effective or detrimental to the business.
Changes in revenue may indicate how well personalization is working. Are customers buying more products? Are they spending more per order? Which product recommendations are most effective? For example, the retailer BustedTees targeted its messages based on time zone. This resulted in an 8% boost in revenue overnight.
Are you gaining new customers? With its “Share a Coke” campaign, Coca-Cola saw a growth in sales for the first time in 10 years, indicating that the personalization was delighting current customers and attracting new ones.
Are people interacting more with your content? Perhaps by opening emails more often or forwarding your personalization to friends and family? HubSpot noticed when they sent emails from an account rep, the click-through rate increased to 0.96%. It also generated 292 more clicks. The opposite effect, such as a rise in unsubscribe requests, could be a sign that your personalization has overstepped. That means it’s time to dial back a bit.
Production challenges of personalization
All the benefits of personalization mentioned here come with some challenges. Brands must balance personalization with the following challenges.
It often takes a significant amount of time and resources to brainstorm personalization campaigns. Then, you have to gather data to gauge their effectiveness. If you’re just starting to venture into personalization, you don’t have to master complex AI campaigns overnight. Start small. For example, test different email subject lines, send times, or merge tags. That can be enough to see increased engagement. Regularly set aside time (every week, month, or quarter) to measure your campaigns, adapt, and improve.
Personalization requires the use of some technology (and a budget for it). However, investing in cutting-edge machine learning from the get-go isn’t necessary. For starters, see what your current marketing automation or advertising platforms offer. Once you determine what’s already available, you can grow in-house using what you have. Scale from there or outsource your personalized advertising efforts to a team to manage your process and optimizations.
Staying apprised of privacy developments requires time and intentionality. Regulations are constantly evolving, as seen with the General Data Protection Regulation and Apple’s new privacy protections. Ensure someone on your team—or a strong legal counsel—can keep you informed about privacy developments so your personalization strategy stays in compliance and adheres to best practices.
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With the rise of AI and machine learning, we’re just scratching the surface of what may be possible with personalization. Keep the consumer at the center of the personalization—consider what would genuinely help, delight, and connect your audience—and both you and your customers stand to benefit greatly from personalization.