Personalized marketing, also known as one-to-one marketing or individual marketing, is a
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
strategy by which companies leverage
data analysis and digital technology to deliver individualized messages and product offerings to current or prospective customers. Advancements in
data collection methods,
analytics,
digital electronics
Digital electronics is a field of electronics involving the study of digital signals and the engineering of devices that use or produce them. This is in contrast to analog electronics and analog signals.
Digital electronic circuits are usual ...
, and
digital economics, have enabled marketers to deploy more effective
real-time
Real-time or real time describes various operations in computing or other processes that must guarantee response times within a specified time (deadline), usually a relatively short time. A real-time process is generally one that happens in defined ...
and prolonged
customer experience
Customer experience (CX) is a totality of cognitive, affective, sensory, and behavioral consumer responses during all stages of the consumption process including pre-purchase, consumption, and post-purchase stages. Pine and Gilmore described th ...
personalization tactics.
Beginning in the early 1990s,
web developers began tracking
HTML
The HyperText Markup Language or HTML is the standard markup language for documents designed to be displayed in a web browser. It can be assisted by technologies such as Cascading Style Sheets (CSS) and scripting languages such as JavaSc ...
calls that their websites were receiving from online visitors. In 2012, the Web Analytics Association (WAA) officially changed its name to the Digital Analytics Association (DAA) in order to accommodate new and developing data streams that exist in addition to the web.
Technology
Personalized marketing is dependent on many different types of technology for
data collection,
data classification,
data analysis,
data transfer
Data transmission and data reception or, more broadly, data communication or digital communications is the transfer and reception of data in the form of a digital bitstream or a digitized analog signal transmitted over a point-to-point or ...
, and data
scalability
Scalability is the property of a system to handle a growing amount of work by adding resources to the system.
In an economic context, a scalable business model implies that a company can increase sales given increased resources. For example, a ...
. Technology enables
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
professionals to collect first-party data such as gender, age group, location, and income and connect them with third-party data such as
click-through rate
Click-through rate (CTR) is the ratio of users who click on a specific link to the number of total users who view a page, email, or advertisement. It is commonly used to measure the success of an online advertising campaign for a particular we ...
s of online
banner ad
A web banner or banner ad is a form of advertising on the World Wide Web delivered by an ad server. This form of online advertising entails embedding an advertisement into a web page. It is intended to attract traffic to a website by linking ...
s and
social media
Social media are interactive media technologies that facilitate the creation and sharing of information, ideas, interests, and other forms of expression through virtual communities and networks. While challenges to the definition of ''social medi ...
participation.
Data Management Platforms: A data management platform (DMP) is a centralized computing system for collecting, integrating and managing large sets of
structured
Structuring, also known as smurfing in banking jargon, is the practice of executing financial transactions such as making bank deposits in a specific pattern, calculated to avoid triggering financial institutions to file reports required by law ...
and
unstructured data
Unstructured data (or unstructured information) is information that either does not have a pre-defined data model or is not organized in a pre-defined manner. Unstructured information is typically text-heavy, but may contain data such as dates, num ...
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
Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
that resonate with their unique needs and wants. Growing number of DMP software options are available including
Adobe Systems Audience Manager and Core Audience (
Marketing Cloud) to
Oracle-acquired
BlueKai
Oracle BlueKai Data Management Platform, formerly BlueKai, is a cloud-based data management platform which is part of Oracle Marketing that enables companies to personalize online, offline, and mobile marketing campaigns. BlueKai was created i ...
,
Sitecore
Sitecore is a customer experience management company that provides web content management, and multichannel marketing automation software. The company was founded in 2001 in Denmark.
Origins
In 1998, in Copenhagen, Denmark, University of Copen ...
Experience Platform and X+1
Customer Relationship Management Platforms: Customer relationship management (CRM) is used by companies to manage and analyze customer interactions and data throughout the customer lifecycle to improve business relationships with customers, assist in customer retention and drive 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
A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google, Facebook, Amazon, and Wi ...
,
live support,
direct mail
Advertising mail, also known as direct mail (by its senders), junk mail (by its recipients), mailshot or admail (North America), letterbox drop or letterboxing (Australia) is the delivery of advertising material to recipients of postal mail. The d ...
, 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. Most popular enterprise CRM applications are
Salesforce.com
Salesforce, Inc. is an American cloud-based software company headquartered in San Francisco, California. It provides customer relationship management (CRM) software and applications focused on sales, customer service, marketing automation, a ...
,
Microsoft Dynamics CRM
Microsoft Dynamics 365 Sales is a customer relationship management software package developed by Microsoft. The current version is Dynamics 365. The name and licensing changed with the update from Dynamics 2016.
Release History
Microsoft C ...
,
NetSuite, 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.
Strategies
One-to-one marketing 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.
#Identify: In this stage, the major concern is to get to know the customers of a company, to collect reliable data about their preferences and how their needs can best be satisfied.
#Differentiate: To distinguish the customers in terms of their lifetime value to the company, to know them by their priorities in terms of their needs, and segment them into more restricted groups.
#Interact: In this phase, 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.
#Customize: 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.
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.
Businesses
Before the
Internet
The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, pub ...
, it was difficult for businesses to measure the success of their
marketing campaign
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to empha ...
s. A campaign would be launched, and even if there was a change in revenue, it was nearly impossible 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
Behavior (American English) or behaviour (British English) is the range of actions and mannerisms made by individuals, organisms, systems or artificial entities in some environment. These systems can include other systems or organisms as we ...
data. This behavioral data, as well as being able to track consumers’ habits, allows firms to better determine what
advertising campaign
An advertising campaign is a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication (IMC). An IMC is a platform in which a group of people can group their ideas, beliefs, and conc ...
s and marketing efforts are bringing customers in and what demographics they are influencing. This allows firms to drop efforts that are ineffective, as well as put more money into the techniques that are bringing in customers.
Some personalized marketing can also be automated, increasing the efficiency of a business's marketing strategy. For example, an automated
email
Electronic mail (email or e-mail) is a method of exchanging messages ("mail") between people using electronic devices. Email was thus conceived as the electronic ( digital) version of, or counterpart to, mail, at a time when "mail" mean ...
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
A mobile application or app is a computer program or software application designed to run on a mobile device such as a phone, tablet, or watch. Mobile applications often stand in contrast to desktop applications which are designed to run on d ...
could send a notification about relevant deals to a customer when he or she is close to a store.
Customers
Consumers face an
overwhelming variety and volume of products and services available to purchase. A single retail website can offer thousands of different products, and few have the time or are willing to make the effort 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.
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 more quickly find what they are looking for and avoid wasting time scrolling through irrelevant content and products. Consumers have come to expect this sort of user experience that caters to their interests, and companies that have created ultra-customized digital experiences, such as
Amazon
Amazon most often refers to:
* Amazons, a tribe of female warriors in Greek mythology
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon River, in South America
* Amazon (company), an American multinational technolog ...
and
Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fi ...
.
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 DMP,
geotargeting
In geomarketing and internet marketing, geotargeting is the method of delivering different content to visitors based on their geolocation. This includes country, region/state, city, metro code/ zip code, organization, IP address, ISP, or other cri ...
, and various forms of social media. Now, many people believe it is the inevitable baseline for the future of marketing strategy and for future business success in competitive markets.
Adapt to technology: For personalized marketing to work the way advocates say it will, companies are going to have to adapt to relevant technologies. They will have to get in touch with the new and popular forms of social media, data-gathering platforms, and other technologies that not all current employees and businesses may be familiar with or can afford. Companies that have been able to afford it, have employed
machine learning
Machine learning (ML) is a field of inquiry devoted to understanding and building methods that 'learn', that is, methods that leverage data to improve performance on some set of tasks. It is seen as a part of artificial intelligence.
Machine ...
,
big data and
AI that make
personalization
Personalization (broadly known as customization) consists of tailoring a service or a product to accommodate specific individuals, sometimes tied to groups or segments of individuals. A wide variety of organizations use personalization to improv ...
automatic.
Restructuring current business models: Adopting a new marketing system tailored to the most relevant technologies will take time and resources to implement. Organized planning, communication and restructuring within businesses will be required to successfully implement personalized marketing. Some companies will have to accept that their current business and marketing models will change radically, and probably often. They will have to reconsider the ways customer data and information circulate within the company and possibly beyond. Company databases will be flooded with expansive personal information – individual's geographic location, potential buyers’ past purchases, etc., and there may be complications regarding how that information is gathered, circulated internally and externally, and used to increase profits.
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.
Privacy is always an issue, in some countries more than others, so companies have to manage any legal hurdles before personalized marketing can be adopted. Specifically, the
EU has passed rigid regulation, known as
GDPR
The General Data Protection Regulation (GDPR) is a European Union regulation on data protection and privacy in the EU and the European Economic Area (EEA). The GDPR is an important component of EU privacy law and of human rights law, in parti ...
, 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
California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
has followed suit and passed the
CCPA
Catabolite Control Protein A (CcpA) is a master regulator of carbon metabolism in gram-positive bacteria. It is a member of the LacI/ GalR transcription regulator family. In contrast to most LacI/GalR proteins, CcpA is allosterically regulated ...
in 2018.
Controversies
Many people are concerned that companies are using too much personal information to create the personalized marketing used today by businesses.
Use of algorithms
Data is being generated by
algorithm
In mathematics and computer science, an algorithm () is a finite sequence of rigorous instructions, typically used to solve a class of specific problems or to perform a computation. Algorithms are used as specifications for performing ...
s, and the algorithms associate preferences with the user's
browsing history
Web browsing history refers to the list of web pages a user has visited, as well as associated metadata such as page title and time of visit. It is usually stored locally by web browsers in order to provide the user with a history list to go back ...
or
personal profile
Personal may refer to:
Aspects of persons' respective individualities
* Privacy
* Personality
* Personal, personal advertisement, variety of classified advertisement used to find romance or friendship
Companies
* Personal, Inc., a Washington, ...
s. Rather than discovering new facts or perspectives when one searches for news, information, or products, one will be presented with similar or adjoining concepts ("
filter bubble
A filter bubble or ideological frame is a state of intellectual isolationTechnopediaDefinition – What does Filter Bubble mean?, Retrieved October 10, 2017, "....A filter bubble is the intellectual isolation, that can occur when websites make us ...
"). Some consider this exploitation of existing ideas rather than discovery of new ones. Presenting someone with only personalized content may also exclude other, unrelated news or information that might in fact be useful to the user.
Algorithms may also be manipulated. In February 2015,
Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlant ...
ran into trouble over an automated, algorithm-generated bot created for advertising purposes.
Gawker’s editorial labs director, Adam Pash, created a
Twitter
Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...
bot @MeinCoke and set it up to tweet lines from ''
Mein Kampf'' and then link to them with Coca-Cola’s campaign #MakeItHappy. The result was that for two hours, Coca-Cola’s Twitter feed was broadcasting big chunks of
Adolf Hitler
Adolf Hitler (; 20 April 188930 April 1945) was an Austrian-born German politician who was dictator of Nazi Germany, Germany from 1933 until Death of Adolf Hitler, his death in 1945. Adolf Hitler's rise to power, He rose to power as the le ...
’s text. 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.
Internet marketing
Personalized marketing had been most practical in interactive media such as the internet. A web site can track a customer's interests and make suggestions for the future. 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
In marketing, manufacturing, call centre operations, and management, mass customization makes use of flexible computer-aided systems to produce custom output. Such systems combine the low unit costs of mass production processes with the flexibility ...
.
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.
Personalization is the term that later followed as a way of describing this evolution in Internet marketing.
Advancements in data collection and IP targeting technology have enabled marketers to deploy one-to-one marketing to individual buildings or homes using an offline to online strategy, matching customers and their devices online simply by obtaining a physical mailing address.
Other marketing
More recently, personalized marketing, also known as Individual marketing, has become practical for bricks and mortar retailers. The market size, an order of magnitude greater than that of the Internet, demanded a different technological approach now available and in use. Many retailers attract customers to the physical store by offering discounted items which are automatically selected to appeal to the individual recipient. The interactivity occurs through the offer redemptions recorded by the
point of sale systems, which can then update each model of the individual shopper. Personalization can be more accurate when based solely upon individual purchasing records because of the simplified and repetitive nature of some bricks and mortar retail purchasing, for example grocery superstores.
Don Peppers and Martha Rogers, in their book on the subject, ''The One to One Future'',
speak of managing customers rather than products, differentiating customers not just products, measuring share of customer not share of market, and developing
economies of scope
Economies of scope are "efficiencies formed by variety, not volume" (the latter concept is "economies of scale"). In economics, "economies" is synonymous with cost savings and "scope" is synonymous with broadening production/services through div ...
rather than
economies of scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...
. They also describe personalized marketing as a four phase process: identifying potential customers; determining their needs and their lifetime value to the company; interacting with customers so as to learn about them; and customizing products, services, and communications to individual customers.
Some commentators (including Peppers and Rogers) use the term "one-to-one marketing" which has been misunderstood by some. Seldom is there just one individual on either side of the transaction. Buyer decision processes often involve several people, as do the marketer's efforts. However, the excellent metaphor refers to the objective of a single message source (store) "to" the single recipient (household), a technological analogy to a "
mom and pop
]
A mother is the female parent of a child. A woman may be considered a mother by virtue of having given birth, by raising a child who may or may not be her biological offspring, or by supplying her ovum for fertilisation in the case of gestati ...
" store on a first-name basis with 10 million customers.
Difficulties
McKinsey & Company, McKinsey identified 4 problems that prevent companies from implementing large scale personalization
* Companies are storing and collecting data - but are not able to sync and analyze the right data together at the right time.
* Many marketers are looking for events and are not thinking about
Behavioral targeting, triggers - This means that marketers are looking for external motives for personalization, such as holidays, while personalized marketing works best when it is based on triggers - i.e. customers' own behavior.
* Hierarchal companies - personalization marketing works best in agile companies, companies where there's a lot of cross-department collaboration. But most companies are used to hierarchal, strict structures that prevents data sharing across companies.
* Not using adequate technology - the wrong technological solution has been implemented.
See also
*
Behavioral targeting
*
Datafication
Datafication is a technological trend turning many aspects of our life into data which is subsequently transferred into information realised as a new form of value.
Kenneth Cukier and Viktor Mayer-Schönberger introduced the term ''datafication'' ...
*
Digital marketing
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. Its development d ...
*
Mass customization
In marketing, manufacturing, call centre operations, and management, mass customization makes use of flexible computer-aided systems to produce custom output. Such systems combine the low unit costs of mass production processes with the flexibili ...
*
Recommender system
A recommender system, or a recommendation system (sometimes replacing 'system' with a synonym such as platform or engine), is a subclass of information filtering system that provide suggestions for items that are most pertinent to a particular ...
*
Management information system
A management information system (MIS) is an information system used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization. The study of the management information systems involves peo ...
*
Intelligent document {{Unreferenced, date=January 2008
Intelligent documents are electronic documents with more functionality than a page designed to emulate paper. Formats include PDF from Adobe, InfoPath from Microsoft, and XForms from W3C. Each is based on using ...
*
Relationship marketing
*
Configurator
Configurators, also known as choice boards, design systems, toolkits, or co-design platforms, are responsible for guiding the user through the configuration process. Different variations are represented, visualized, assessed and priced which star ...
*
Internet marketing
The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, pub ...
*
Variable pricing
Variable pricing is a pricing strategy for products. Traditional examples include auctions, stock markets, foreign exchange markets, bargaining, electricity, and discounts. More recent examples, driven in part by reduced transaction costs ...
*
Variable data printing Variable data printing (VDP) (also known as variable information printing (VIP) or variable imaging (VI)) is a form of digital printing, including on-demand printing, in which elements such as text, graphics and images may be changed from one pri ...
*
Real-time Marketing
*
Targeted 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. These traits can either be demographic with a focu ...
*
Surveillance capitalism
Surveillance capitalism is a concept in political economics which denotes the widespread collection and commodification of personal data by corporations. This phenomenon is distinct from government surveillance, though the two can reinforce each o ...
*
Internet manipulation
Internet manipulation refers to the co-optation of digital technology, such as social media algorithms and automated scripts, for commercial, social or political purposes. Such tactics may be employed with the explicit intent to manipulate public ...
*
GDPR
The General Data Protection Regulation (GDPR) is a European Union regulation on data protection and privacy in the EU and the European Economic Area (EEA). The GDPR is an important component of EU privacy law and of human rights law, in parti ...
*
CCPA
Catabolite Control Protein A (CcpA) is a master regulator of carbon metabolism in gram-positive bacteria. It is a member of the LacI/ GalR transcription regulator family. In contrast to most LacI/GalR proteins, CcpA is allosterically regulated ...
*
Hypertargeting
*
Real-time bidding
Real-time bidding (RTB) is a means by which advertising inventory is bought and sold on a per- impression basis, via instantaneous programmatic auction, similar to financial markets. With real-time bidding, advertising buyers bid on an impression a ...
References
{{reflist
Market segmentation