Digital Marketing Success, Part II: Why Personalized Advertising is the Future
After breaking down the ways many modern digital marketers approach product advertising in part one of this series, we wanted to dive a little deeper into personalization and its implications for the future of marketing.
Personalization is a concept well known to brands and retailers. In fact, according to a recent Forrester report, 89% of digital marketing professionals identify personalization as a top priority.
But for many e-commerce sellers, personalization is still only framed around part of the customer’s experience — starting with a retailer’s website and extending through the purchase and post-purchase process. While these efforts are important, they don’t cover the whole journey.
Increasingly, consumers aren’t starting on your website. According to Survata, only around 15% are coming there first. Instead, they’re starting on channels like Amazon, search engines or social networks. That means the shopping process actually starts on the search results page. And that’s where personalization should begin too.
We believe the concept of personalized digital advertising will fundamentally reshape how marketers think about spending advertising budgets. Greater personalization offers improved ROI and a better end-to-end consumer experience. These concepts have been leveraged before — primarily in areas like email marketing — but are more nascent in search and social advertising. It’s even more critical on mobile devices where attention spans shrink and irrelevant ads are easily dismissed.
So what is personalized advertising?
A personalized campaign starts with a focus on the shopper and his or her behaviors — not on the keywords or ad copy. Marketers should think about the person behind the click rather than just a total number of clicks in a spreadsheet. This means we’re advertising to real people — people using a single device, at a certain time of day, at a certain location in the world.
For example, imagine you’re a retailer of running shoes that offers everything from fairly basic running shoes for casual fitness all the way up to those used by serious athletes that are running hundreds of miles per week. In this scenario, consider two different people: Jim and Cathy.
- Jim is a casual runner who would proudly classify himself as a weekend warrior. He does the occasional 5k mostly to stay in shape.
- Cathy is a serious runner, the type of person you see running even when the weather is awful. She competes in 5-6 marathons per year and logs 90-100 miles per week.
By leveraging user behavior, as well as demographics and signals from many different sources (Google, the CRM system, past orders), marketers can serve personalized results when these two individuals search on Google for “running shoes.”
Jim might see a moderately-priced men’s model appropriate for his style, while Cathy would see the latest top-of-the-line women’s shoe from her preferred brand.
True personalization, however, goes well beyond demographics and stereotypes. By focusing on the behavior of the individual, we are able to tailor the advertising to their needs, regardless of how well that fits our perception of the “typical” customer.
The role of CRM
Both Facebook and Google offer programs that enable advertisers to share their customer data to create audiences that can be advertised to. While many retailers have adopted these programs, they often stop at the basics of identifying former customers. Marketers need to be able to segment this data in ways that can be leveraged in their advertising program. For example, if we know that someone’s past purchase history indicates a brand affinity, we can tailor their advertising to that brand.
Future implications of personalization
1. Budget Efficiency
Retailers that get personalization right will drive more efficiency from their ad spend since more relevant ads will drive a higher conversion rate and a higher return on ad spend (ROAS). Retailers that don’t adopt this strategy have to spend more marketing dollars to get the same level of sales.
2. Ad Quality
The bar for what is a “good” ad from the consumer perspective will rise. Consumers don’t view relevant and unobtrusive ads as advertisements, so engagement and click-through rates (CTRs) are high. Current ads that aren’t personalized will suffer a reduced level of engagement.
3. Customer Databases
CRM systems will increasingly play a key role for the digital advertiser. The ability to really segment past customers across a multitude of dimensions opens up endless possibilities for advertising campaigns. For example, you could create an audience of “all customers who bought from us in 2016, but not 2017 in a given category.”
4. Skill Sets
The ability to get both very granular yet not miss the big picture is a key skill for both digital marketing platforms and the people driving the campaigns. Brands and retailers need to evaluate their current analytics capabilities and determine where they have gaps.
Ultimately, the brands and retailers that embrace this new frontier of personalization, starting with the initial customer touch point, will drive greater returns.
For more information on digital marketing or how you can identify where you need help across the e-commerce spectrum – from marketing to selling to fulfilling – check out our eBook: The Story of E-Commerce Success: Marketing, Selling & Fulfilling.
Looking for ways to optimize your digital marketing campaigns? Contact one of our experts for a Complimentary Advertising Analysis today! They’ll look at your current Amazon, Google or Facebook accounts and find new opportunities to help you meet and exceed your digital marketing goals.