Personalized marketing

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Personalized marketing, also known as one-to-one marketing or individual marketing, is a marketing 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, and digital economics, have enabled marketers to deploy more effective real-time and prolonged customer experience personalization tactics.^{[citation needed]}

Beginning in the early 1990s, web developers began tracking HTML 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.^[1]

Technology

Personalized marketing is dependent on many different types of technology for

One-to-one marketing[5] 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.^[6]

1. 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.
2. 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.
3. 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.
4. 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

Businesses

Before the

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.^[8]

Customers

Consumers face an

Personalized marketing is gaining headway and has become a point of popular interest with the emergence of relevant and supportive technologies like DMP, geotargeting, 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, big data and AI that make personalization automatic.^[12]

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.^[13]

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.

Many people are concerned that companies are using too much personal information[15] to create the personalized marketing used today by businesses.

Use of algorithms

Data is being generated by

Algorithms may also be manipulated. 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. The result was that for two hours, Coca-Cola’s Twitter feed was broadcasting big chunks of Adolf Hitler’s text.^[17] 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.^[18]

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

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,^[19] 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 rather than economies of scale. 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 "

Difficulties

McKinsey identified 4 problems that prevent companies from implementing large scale personalizations:[1]

• 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
  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

References