The end of wastage?
Consumers want it, and technology makes it possible: Advertising is becoming increasingly personalized. Who needs mass media anymore?
Why fly to Arizona when you can have the same experience much closer to home—and on a much smaller budget? Anyone looking for a trip a while back was presented with exactly this suggestion: For Deutsche Bahn’s «No need to fly» campaign, created by Ogilvy, an algorithm found images of natural wonders, buildings, and cities in Germany that closely resembled travel destinations around the world: a rickety suspension bridge in Vancouver—and one right next to it in the Hunsrück. A breathtaking canyon in Oregon—and one in Bavaria (see pictures below).To do this, target groups interested in specific destinations were identified using Facebook data. Geotargeting determined the nearest airport and destination for each person, and a search engine found the cheapest flight fare. A personalized offer was then created via a video ad: an affordable train trip to a German destination instead of an expensive flight to a faraway destination that looks almost exactly the same—all automated and featuring countless variations. The campaign garnered worldwide attention and won numerous awards, from Cannes to New York. Moreover, it impressively demonstrates just how creative personalized marketing can be.
«Advertising should no longer be intrusive; instead, it should offer added value.»
While many years ago everyone was familiar with the commercial featuring the «Melitta Man» or the latest provocative Benetton ad, consumers today are often exposed to a wide variety of advertising messages—and, ideally, the one that best suits their personal needs. «Mass communication is becoming personalized and tailored to consumers,» explains Benjamin Tück, Managing Director and Accenture Interactive Lead for Switzerland. «Advertising should no longer be intrusive; instead, it should offer added value.»
Many small assets
A personalized approach, tailored product recommendations, custom banners, personalized TV commercials, and digital outdoor advertising tailored to passersby: personalization in marketing takes many forms. «With personalized advertising, there’s no longer just one big video or one banner—instead, there are many small advertising assets that meet the specific needs of consumers,» says Carsten Jamrow, Executive Creative Director and member of the executive board at Jung von Matt Limmat. The advertising executive calls it a shift in thinking when it comes to producing these assets: «We’re no longer talking about five to ten assets, but—depending on the brand—certainly several hundred to a thousand.» And it was time for this shift in thinking, because consumers today are practically demanding that companies address them in a personalized way. They’ve long been accustomed to personalized product recommendations from online giants like Amazon or services like Netflix—so why shouldn’t advertising also come with tailored messages?
Experts agree: Nearly 80 percent of the technology experts surveyed from companies in North America, Europe, Asia, Africa, Australia, and New Zealand stated in an Optimizely study that personalized content and product delivery already has a medium to high priority, meaning it is no longer just a trend but a genuine «must-have.» Fifty-six percent are convinced that personalization leads to higher customer satisfaction. And yet, implementation is lagging: 91 percent believe that companies’ technical infrastructure is not yet equipped to meet these requirements, and that artificial intelligence and machine learning are not yet being utilized sufficiently. Consumers see it this way, too: According to a study by Periscope by McKinsey, 42 percent of consumers feel that the majority of advertising messages still come across as mass-produced.
There is no single truth
Does personalized advertising spell the end of one-to-many marketing—better known as the «scattergun» approach—and, by extension, wasted reach? «One doesn’t rule out the other,» says Carsten Jamrow. «While we believe that successful campaigns should become increasingly personalized in the future, mass media still has the unbeatable advantage of building broad reach, especially for brand campaigns.» In other words, it depends on the objective; advertisers must first ask themselves what they want to achieve with their campaign. “You first have to fill the funnel with awareness tools (push) in order to then capture traffic on websites, in physical stores, or on search engines using performance tools (pull),” explains Nico Podgorny, Director of Digital at Havas Switzerland.
This means that for products relevant to all target groups—such as FMCG—a broad approach is worthwhile, as it is for branding campaigns. However, if you want to promote a more specialized product that isn’t aimed at everyone but only at a specific customer base, the campaign should be tailored to that audience. Companies today can no longer afford to advertise using a purely «scattergun» approach. «With the scattergun approach, you’d always have to accept waste coverage—and that would be unacceptable from a budget management perspective. Starting with a broad approach to gather insights about potential customers and then personalizing the campaign in the next step would be a conceivable approach. This shows that there isn’t just one right answer here either,» says Benjamin Tück of Accenture.
Solutions for a Cookie-Free Future
There is no single truth, but there is a new one—and for advertisers, that means the effort required is increasing. They need the right data, but that’s not always so easy. According to a global study by Optimizely, technology experts see limited access to usable, reliable data as the biggest obstacle to successful personalization projects. The reasons: insufficient data access, subpar IT infrastructure, and gaps in personnel resources and expertise. Respondents are convinced that this has a negative impact on business performance. However, in addition to using the right data, it’s also important to use it wisely and not overdo personalization. «In channels that can be credibly personalized and are also perceived as personal in the context of use—such as email, direct mail, or chats—a well-executed, personalized approach can build trust and offer the consumer added value. However, it’s important that not just a few elements—such as the salutation—but all parts demonstrate maximum personal relevance. Otherwise, the message runs the risk of being interpreted negatively,» says Nico Podgorny of Havas. Another thing that doesn’t go over well: when the targeting is off—like those colorful striped bed sheets that are offered for sale over and over again across all channels, even though you’ve already bought them long ago.
On top of that, there’s another problem affecting the entire advertising market: the end of third-party cookies is just around the corner, and first-party and alternative data are becoming more important. Service providers like Uhoo are working flat out on solutions for a cookie-free future: The company relies on precise geographic insights, which—as CEO Stephan Frey promises—allow it to know exactly what is where and which groups of people are located where. This means users are targeted based on their specific circumstances—all without cookies. To achieve this, Uhoo says it has established a virtual network across Switzerland. As a result, ads for financial service providers or luxury goods, for example, are shown only in affluent communities, while sustainability-related content is targeted only at locations that voted in favor of environmental protection and sustainability in the most recent referendum. According to Frey, this is exactly the right approach, because «personalized advertising doesn’t necessarily mean building an individual data profile. Rather, it means addressing a user based on their sociodemographics or interests.» Now it all depends on what companies do with this information to ensure that customers also derive added value from it. One thing is certain, however: they have significantly more options today than they did back when the «Melitta Man» was still flickering across every screen at once.
This article first appeared in the m&k print edition 1-2/2022.
