What is Personalized Marketing?

Adam Hencz

May 31, 2022

Huge investments are poured into leveraging data analytics to make advertising messages and product experiences feel unique to each customer. But just to be clear, personalized marketing entails far more than simply entering the customer's name into the same marketing email that is sent to all of your subscribers and clients. It's all about getting the right message to the right person at the right time with the most appropriate content.

Personalizing your marketing not only adds a human touch to your content but can also boost your ROI. Here's why you should tailor your marketing to each individual customer or segment and how to deal with its major challenges.

What is personalization in marketing?

Personalized marketing, also known as marketing personalization, is the strategy of using data to convey brand messaging and tailor marketing content such as visual assets to individual customers and prospects. This strategy contrasts with traditional marketing, which focuses on casting a large net in order to attract a small number of customers.

You can use a variety of marketing personalization techniques, including email customization, advertising personalization, product personalization, and so on. Personalized marketing covers collecting customer data on interests, purchasing preferences, purchase history, behavioral data, and other information. 

Why personalize advertising and marketing assets?

Marketing personalization was dubbed the "Holy Grail" of digital marketing for retail and consumer goods businesses by McKinsey. Today the market is flooded with affordable tech tools promising solutions to businesses with personalization strategies.

At the same time, consumer expectations are also at an all-time high. According to Marketo, more than 85% of online shoppers anticipate and appreciate personalization as part of their shopping experience. While Forrester found that 77% of shoppers would choose, promote, or pay extra for a brand that provides a personalized service or experience.

With a well-executed personalization strategy, you can satisfy these needs while benefiting your business. Here are the three main advantages of marketing personalization:

A more satisfying customer experience

Brands must have a presence across several touchpoints in order to create personalized experiences that enhance the overall customer experience. Shoppers today expect your business to know their exact needs and compel you to craft exceptional omnichannel experiences.

In some cases, they expect content that answers their long-tail query when they type it into your search bar. If they're in your physical store, they're probably looking for product details. At each touchpoint along the way, ask yourself, "What does the consumer want here?" "What exactly are they looking for?" and you will be on the right track to unmap customer touchpoints to focus on.

Increased customer loyalty and higher revenue

If your business maintains accurate customer data, you can continue to tailor messages and give them relevant content every time. Your customers will be more likely to keep engaging with your brand if they receive offers or see content that resonates with them personally. If your brand makes a customer happy with the content and quality of your marketing efforts, your client is more willing to accept your offers and will buy from your company again.

Better return on investment

Personalized marketing is considered more cost-effective than traditional advertising, while personalized recommendations also encourage clients to spend more. According to another McKinsey insight, personalized marketing can improve sales by 10% on average and provide up to 8x the ROI on marketing spend.

Personalized marketing trends

Let’s take a look at the main trends and examples of personalized marketing in 2022.

  • Product recommendations. For years, businesses have used artificial intelligence and machine learning to deliver individualized experiences. One common use case is displaying product recommendations based on historical data, but AI has so much promise that we're only scratching the surface.
  • Customer prediction. Predictive technology based on AI and machine learning is gaining pace in AdTech and MarTech as more solutions arise with the ability to predict forecast behavior, predict sentiment, and provide data across various audiences. 
  • Focus on general traits in human behavior. While many believe that personalization, if fulfilled once you can deliver a truly one-to-one experience unique to your individual client, there is an opposite push at play: we humans tend to respond similarly to the same input. Recent advances in neuroscience and psychology research show that humans are surprisingly coherent in their responses to visual stimuli. This means that our responses and behaviors are possible to generalize, and knowing a smaller group's responses can predict the response of an entire market very well.

Challenges of personalized marketing

Personalization, when accomplished, improves consumers' lives and promotes engagement and loyalty by delivering communications that are tuned to, and even anticipate, what customers really want. But in practice, it is not as plain and straightforward as it sounds. And we have all seen its hurdles. Here's how to tackle the two main challenges of personalization:

Collecting data without annoying your audience

To provide a personalized experience, you might think that you must be able to precisely forecast how each individual would react to a specific stimulus, like as different elements of an advertising campaign or an in-store scenario. That often means that you'll need to collect data on your connections across all possible customer touchpoints. This is both challenging in terms of planning but also to execute that strategy without harassing your potential customers.

You can read more about data-collection techniques in one of our previous insights posts, but what we need to shed light on here is the two different data collection channels out there.

You can, first of all, track people's behavior with analytics tools and place cookies in your visitors’ browsers. Although getting behavioral data might have little effect on the client experience, customers are increasingly irritated when they encounter banners and ads for things they have just viewed or even already bought. On the other hand, customer surveys and questionnaires are more transparent, and many customers prefer them, but they take time to complete. And the more questions on a form, the less likely a person is to complete it.

Keeping pace with high-quality content production

It takes time and resources to go through the creative ideation process and craft the right creatives that draw attention and motivate action in your audience's minds. Creativity can only flow easily when your team has time to completely develop and formulate their ideas.

The increasing demand for unique versions of ad creatives, along with time restrictions, adds an extra degree of stress that can stifle overall productivity and harm brand promotion. Creative teams need to find ways to ease and automate some parts of the creative process, like ad testing, optimization, and customer prediction in order to make headspace for keeping novel ideas flowing.

Staying on top of marketing trends

Marketing is all about getting ahead of your competition and staying on top of current trends so you can better serve the needs of your audiences. This is especially true online, where the rules of the game change so rapidly. But how do you push content to market that works effectively in most arenas?

True personalization means providing the material that is unique to each channel. Long-form content that draws readers and conversions to your website will not work on a banner or Twitter. You must atomize the materials you create into a range of more digestible, bite-sized chunks tailored to each individual channel.

Marketing tools for personalization

Before investing in any tool, it is critical to understand where you are in your personalization journey and where you want to go next. The possibilities are endless when it comes to expanding your toolkit and using products that help you create personalized content and ease workflows.

Scaling personalization efforts is the most difficult challenge. Obviously, you can't create an email for every consumer from scratch. You can't create an ad for each prospect manually. However, you can maintain that appearance, which involves the use of a few tools. Here's what you'll need to get started:

Data platforms

Data management platforms or customer data platforms allow you to have access to and control over consumer data. You can store and manage audience and campaign data from digital sources and have full control over the customer data you collected so far.

For marketers, it's a one-stop-shop for managing user data in order to segment audiences and build user groups for digital advertising campaigns. ​​Email marketing platforms are now also an essential component of every marketing technology stack, as it is one of the most profitable channels that rely on customer data.

Creative management

You must also be able to generate an unprecedented volume of ads and other creatives required for personalized campaigns. Managing the ever-growing number of your marketing and brand assets can also be a challenge.

Dynamic Creative Optimization might be for you if you are looking into automizing how you build creatives. DCOs allow you to reassemble a range of ad components, such as main body backgrounds, main images, overlay text, and so on, when they are live.

While DCOs can compose versions on the fly, Creative Management Platforms, aka CMPs, offer generative content for creative teams to prebuild a large number of ads for certain segments before launching live campaigns.

Rapid ad testing tools

Machine learning and automation also opened up new horizons in testing and optimizing visual assets from display ads and banners through packaging design to ecommerce websites. Tools like Predict allow you to streamline your creative workflow, saving you time and resources. Utilizing predictive technologies allows for quick bulk testing without having to A/B test and launch your ads live.

At Neurons, we’ve built Predict, a customer prediction AI tool built upon the largest database of behavioral consumer data. With Predict, you can forecast audience attention on your visual assets and in-store layouts with +95% accuracy in a matter of seconds. To learn more, reach out and chat with us!

Key takeaways

Scaling personalization is a difficult task, especially for multinational and multi-brand corporations; nevertheless, the good news is that there is an incredible opportunity to use recent advances in artificial intelligence to tackle the challenges that come with it.

What is Personalized Marketing?