Targeted Marketing in the Digital Age

No one argues with the fact we live in a digital age characterized by big data and advanced analytics. Marketers have had to adjust to this new reality by adopting targeted marketing techniques enabled by new technologies. This pivot to digital technologies prompted David Sable (@DavidSable), Global CEO of Y&R, to ask, “Why have we given up Marketing for Digitaling? When was the last time you heard someone demand Marketing First?”[1] He adds, “Marketing First really means People First. Digital First or Mobile First really means nothing — one describes a technology, the other a state of being … neither describes you.” Analysts from GlobalWebIndex argue that “digital first” or “mobile first” are simply strategies used to reach consumers.[2] Trying to separate a consumer from the data he or she generates makes no sense. They write:

“Businesses now have access to more information regarding their customers than ever before. As well as surface-level data about their gender, age, and geographical location, companies can now derive more detailed insights regarding consumer behavior and preferences. It’s becoming increasingly clear that not only are customers open to sharing their data with businesses in order to receive personalized marketing, they are encouraging it. A recent report by Salesforce, for example, found that 52 percent of customers are extremely or somewhat likely to switch brands if a company doesn’t make an effort to personalize their communications with them. Today, brands are personalizing their marketing efforts in a whole number of ways, gaining fantastic ROI in the process.”

To be fair, Sable doesn’t disagree about the importance of data analytics. “The issue is not that Digital can’t or doesn’t target,” he writes. “The issue is that we don’t use the channels or think about targeting in the right way. We are Digitaling … not Marketing.”

Targeted Marketing in the Digital Age

John Wanamaker, the late department store magnate, once stated, “Half the money I spend on advertising is wasted. The trouble is I don’t know which half.” Let’s be honest. No single approach to advertising is going to be 100% effective. That’s as true for targeted marketing as for any other approach. Sable writes: “As long as we are on the subject of targeting here is the difference between Digitaling and Marketing. According to E-Consultancy, “Highly targeted online ads don’t work.” He then cites the E-Consultancy article:

“[Stanford researchers] found that the most personalized ads were less effective because consumers worried they were being exploited. For example, says [Stanford Graduate School of Business professor Pedro Gardete], Someone looking for a prom dress ‘might get an ad from a retailer saying, “We have a wide selection of prom dresses! Click on this link!” The consumer clicks, and it turns out the retailer has dresses for all occasions but not specifically proms,” says Gardete. Those kinds of ads frustrate consumers and eventually become meaningless to them. Based on this, Gardete suggests that businesses might adopt a ‘less is more’ approach in which less information is collected, information collection is more transparent, and targeting is used more sparingly.”

Sable asserts the less-is-more approach “doesn’t make you a Luddite or a dinosaur … just makes you a better marketer.” Gardete’s example demonstrates how targeted marketing can go astray. The so-called targeted ad didn’t really offer exactly what the customer wanted. It was pseudo-targeting. Zach Heller (@zheller) writes, “The general principle of modern advertising is this — you want to show the right ad, to the right person, at the right time. That’s what we talk about when we talk about targeted advertising.”[3] Gardete’s example didn’t do that. Heller continues:

“Digital tools give marketers the ability to customize, or personalize, advertising in a number of interesting ways. First, we can show different ads to different people based on what we know about who you are. For example, men and women might see different versions of the same ad. Second, we can show ads to people based on something unique about you. For example, you might see an ad for a cable subscription right after you move into your new home. Ad targeting is the Holy Grail for marketers and companies right now, because the ones who get it right are able to dramatically increase their return on investment. Not only does it save money by no longer advertising to people who are not likely to purchase, but it also increases the effectiveness of the ads served because they are more relevant.”

Sable’s argument is that too many marketers get it wrong. It can go wrong in two ways. First, like in Gardete’s example, ads can be pseudo-targeting (i.e., a sort of bait-and-switch approach). Second, they can cross the line from being relevant to being creepy. Heller explains, “It is easy to see that there are lines that can be crossed. For example: You might target ads for high-risk financial products to people with low incomes; you might target ads for alcohol-related products to someone you know has a drinking problem; you might target ads based on race or religion. It might be tempting for marketers to defend how they’re advertising when they can point to success in terms of revenue generated. But you cross the line when the nature of your advertising has detrimental effects on the people you are targeting.”

Getting Targeted Marketing Right

Andrew Busby (@andrewbusby), Founder and CEO of Retail Reflections, agrees with Sable that personalization means more than using data to target ads. He calls personalization and customer experience “natural bedfellows.”[4] If you manage to get the proper balance between personalization and customer experience, you won’t cross the creepy line and your content will be relevant. Busby believes, “Current attempts at personalization are both one dimensional and reactive, at best relying on calendar entries and smart mirrors to create an illusion of personalized engagement.” As an example, he relates that he received a message from a florist suggesting he send flowers to his mother for her upcoming birthday. His mother had passed away nine months previously. He then writes, “Now, I hear you asking: How on earth are they expected to know that my mother had passed away? My response? Don’t be lazy. True personalization is knowing your customer and engaging in a relevant, contextual manner — not simply relying on calendar prompts and firing off unsolicited mailshots. Show me that you can engage in a relevant manner, and I will happily provide the information necessary to give you the context.” He concludes:

“The implications are clear and serious for retailers who do not embrace the technology required to deliver a personalized experience for their customers. Never before have we, as consumers, been so demanding, so willing to drop a brand and move to the competition without hesitation. And what’s more, our expectations keep growing exponentially. Only those retailers who understand this will survive. The outlook for the remainder is bleak.”

If your company can’t, or isn’t comfortable with, gathering, analyzing, and leveraging data to the extent recommended by Busby, then I suggest Sable’s less-is-more approach as a more suitable alternative. One of the best approaches to ensure your company doesn’t cross the creepy line is to provide “content” consumers will find interesting. Content marketing involves customers targeting themselves by searching out information that interests them. “It’s hard to imagine a world where advertising is perfectly targeted to know exactly how you feel and what you need or want,” writes John Scott, Co-Founder and Executive Vice-President at ShopLiftr. “If it were to happen, we may find it incredibly creepy and encroaching of our privacy as there’s a yin and yang about data we want to share. Still, people do share; their preferences are increasingly known; their behavior is teased out to lead them to act. Content marketing is the reason a lot of this is happening.”[5]

Summary

Sable concludes, “Bottom line — I think the battle between Digitaling and Marketing is the battle for future success, and I believe that the winners will be those who understand marketing and people.” He then quotes the late Peter Drucker, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” Targeted marketing can achieve that goal if done correctly. I agree with Sable that targeted marketing isn’t the only approach marketers should use; but, it’s an approach they can’t ignore either. GlobalWebIndex analysts add, “The full-funnel approach to marketing is a well-worn strategy, but it does need some tweaking in the digital age. Consumers no longer make a linear journey from finding out about your product to purchasing it. Instead, consumers often conduct most of their research independently, using a variety of sources from corporate websites to social networks. The latter, in particular, is a hugely important part of the modern marketing funnel, with 43 percent of online users aged between 16 and 24 using social media for product research. Marketers must target and nurture their prospective customers across these new digital mediums if they are to truly adopt a full-funnel approach to marketing.” But, as Sable notes, a people first approach stresses the consumer not the technologies that connect the consumer to the marketer.

Footnotes
[1] David Sable, “Are You Marketing or Are You Digitaling?The Huffington Post, 25 July 2017.
[2] GlobalWebIndex, “The Importance of Data Analytics in Marketing Strategies,” Martech Series, 6 July 2017.
[3] Zach Heller, “Ethical Questions for Marketers: Ad Targeting,” Business2Community, 17 July 2017.
[4] Andrew Busby, “Meet My Friends: Personalization and Customer Experience,” Longitudes, 27 July 2017.
[5] John Scott, “How content marketing is personalizing ads,” Vator, 6 April 2017.

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