Personalized advertising is more effective and engaging than general e-commerce advertising efforts. According to a survey from marketing vendor MyBuys, 48 percent of shoppers spend more money for personalized ads than general ads. Consumers in a Yahoo survey said that personalized ads are more engaging (54 percent), educational (52 percent), time-saving (49 percent) and memorable (45 percent).
Many times, traditional advertising fails to relate to customers. Only 37 percent of shoppers in the Yahoo survey said that most of the ads they see online are relevant to them. Personalized advertising seeks to create a more relevant, immersive and effective experience for customers.
What Is Personalized Advertising?
Personalized advertising reaches users based on the sites they’ve browsed and/or the interests and demographics associated with them, according to Google. It should not be confused with placement targeting, which is a method of displaying ads independent of consumers’ interests or demographics.
This means that an advertiser selling jewelry could use personalized advertising to display ads to users who are interested in jewelry products, even if websites do not have content related to jewelry. The advertiser could also use placement-targeted advertising to display their ads on jewelry-related sites.
How Personalized Advertising Works
Personalized advertising is rooted in the consumer’s intent, or “what the consumer wants or plans to do at that moment or in the future,” according to Alex LePage, vice president of product strategy at advertising firm Rubicon Project, in Marketing Land. “The more marketers understand consumer intent, the more personalized and effective their ads will be.”
Search marketing uses the terms that are entered into a search engine to determine a customer’s intent. For programmatic marketing, which refers to the targeted purchasing and selling of advertising space on all digital platforms, intent data is determined by anonymous online behavior. For instance, Google displays ads based on several factors, such as the following.
- The types of websites visited
- Mobile apps installed on a device
- Browser cookies
- Websites and apps visited that belong to businesses that advertise with Google
- Activity on other devices
- Previous interactions with Google’s ads or advertising services
- Google account activity and information
Other intent signals can include Facebook likes, pinning an item on Pinterest or sharing a link over email. Marketers can use analytics services to understand how customers share content and arrive at a particular website, which informs their advertising efforts.
Advantages of Personalized Marketing
Companies using personalized marketing are 26 percent more profitable and have a 12 percent greater market capitalization, according to Adobe. However, HubSpot reports that there is a gap between the marketers who acknowledge the advantage of personalization and those who use it.
- 88 percent of marketers say that using social graphic data to personalize the online experience has a high impact on ROI and engagement, but only 6 percent do it.
- 68 percent of marketers say that personalization based on behavior data has a high impact on ROI, and 74 percent say that it has a high impact on engagement, but only 19 percent do it.
HubSpot notes that there are at least nine benefits of using personalized advertising.
- Increases Conversions: Tailored messages result in more resonance. Generic information and recommendations are the enemy of conversions, while personalization can yield incremental increases in conversions.
- Makes Conversions Easier: When the action is fast and easy, customers are more likely to act. By “remembering” behavior, preferences and information, marketers can simplify and clarify the conversion process so customers don’t have to complete the same steps over and over. Marketers can personalize forms with their information, offer relevant additional products and services, and ultimately reduce the number of steps it takes to obtain conversions.
- Less Email Yields More Customers: More personalized emails eliminate the “batch-and-blast approach.” Engagement increases and marketers don’t have to send as many emails to each subscriber to achieve desired results. “You’re much more likely to spur action when you personalize the topic, timing, and content of an email to a reader’s profile, and segment your lists based on that,” according to HubSpot.
- Builds a Passionate Audience: Content personalization speaks directly to a customer’s passion. Leveraging personalized advertising generates niche levels of enthusiasm.
- Improves Lead Nurturing: Content personalization makes a strong connection and converts more leads into marketing qualified leads and sales qualified leads. By personalizing marketing efforts, a better marketing or sales funnel is created to appeal to a customer’s place in the funnel.
- Improves Sales Calls: Sales teams can use personalized information to improve their messaging, too.
- Keeps Website Fresh: Visitors do not want to see the same offer over and over. Segmenting content by list or life cycle stage will keep visitors interested, align with their stage in the sales cycle and allow marketers to move existing leads further down the sales funnel.
- Welcomes Newcomers: New subscribers are more likely to show interest when they see that marketers have information relevant to their interests or needs. Personalization can be based on the first offer they convert on, the campaign that drove their response or pages they visited on the website.
- Helps Create Marketing That People Love: “Generic marketing makes people feel assaulted; personalized marketing makes them feel understood,” according to HubSpot. “It differentiates your company as one that cares enough to listen to leads and customers, and deliver the information they want. In other words, it helps you create marketing people love.”
The Future of Personalized Advertising
Social networks like Facebook and Twitter let marketers target smaller and smaller audiences, Adweek notes. By focusing on these audiences and their interests, brands can capitalize on advanced opportunities for personalization.
Lexus used Facebook’s audience segmentation technology to showcase what could be the future of personal advertising. The luxury vehicle brand delivered a single ad campaign that involved more than 1,000 individual videos. Depending on the user’s profile, a specific video was displayed. The award-winning “1000:1” campaign reached 11.2 million Facebook users with a 315 percent higher video view rate than expected and a 1,673 percent higher engagement rate.
“The simplest way to think about personalized video ads is that you take data that you have on individual consumers—where they live, what they earn, what their interests are, etc.—and then create ads that are relevant to those individual consumers based on that data,” Bryan Cook, executive content producer at Team One (the agency behind the Lexus campaign), told Adweek. “For example, if you live in Los Angeles and are into music and fashion, we can make an ad that contains all of these things so that you are more likely to pay attention.”
Video consumption is expected to reach $15 billion by 2019, and personalized video ads could be the future of personalized marketing. Some believe it is worth the obstacles such as scale and budget.
Pursuing a Career in Marketing
Businesses can use personalized advertising methods to connect more effectively with their audience. Aurora University’s online MBA helps students gain the knowledge and skills to leverage marketing opportunities and lead others. The program takes place in a fully online learning environment.