Why Personalisation won't die.

I don’t see personalisation going away any time soon.

The industry and the media that it feeds on will continue to call every new year the “Year of Personalisation. Or some derivative thereof. I bet there will be some inclusion of the prefix “hyper” involved somewhere, too.

The reason for this revitalisation, rejuvenation or redefinition is simple: there is a lot of money to be made from advertising. Particularly targeted advertising.

“If there’s money to be made from the vast advertising estates of Google, Amazon, Facebook and others around the world, you can definitely count on them going where the money is. And the money is in personalisation.” Ian Daniels, Co-Founder, The CX Collective

I agree, Ian you clever clogs. Money is in personalisation and personalisation is in money. Brands just need to know where to look. To quote one of my favourite lines from Indiana Jones and the Raiders of the Lost Ark: “They’re digging in the wrong place!”

A brand’s need to remain relevant and resonate more with customers is never going to fade. It will only ever grow. It’s where the money is. Right now, the sea of choice is too much for consumers; they’re seasick at the thought of having to choose a movie on Netflix or a song on Spotify, only to revert back to watching Das Boot for the fourth time. Consumers need refined messages that resonate to cut through all the noise.

Brands, businesses, and organisations understand this. In the latest version of Dynamic Yield’s “State of Personalisation Maturity Research”, they found that 98% of brands believe in the value of personalisation, understand its benefits to the larger business strategy, or have made it the core of their CX operations. This is up from 93% last year, a record-high trend. There’s only another 2% to be squeezed out from the perpetual belief of brands.

Take Netflix...

Netflix, for example, recently released its new advertising model in Q4 2022. Because of their background in personalisation, you can bet that these ads will be highly targeted and relate to the psychographics, demographics and mental models of their customers. So much so that they are calling out a CPM of $65 – which is higher than 2022’s Super Bowl. “We don’t need to think about the ads experience being uniform across all of our members, we can leverage the personalisation capability we built in terms of titles and how we present titles, and also in terms of how we present ads,” said Greg Peters, Netflix COO and Chief Product Officer.

Surprisingly, a month later, Netflix’s advertising business hit a rough patch. Ad-supported viewership was falling short of expectations, and the company started allowing advertisers to take their money back, though some opted to stick with Netflix and shift their spending dollars a year later. I fear this example isn’t holding up my argument.

Take Facebook...

Facebook is in the same boat. A recent study has revealed that when it comes to understanding our likes, dislikes, preferences, and even personalities, Facebook knows us better than our own family members.

With just a few likes, Facebook's algorithm can accurately predict our personality type better [1] (r = 0.56) than our closest friends, cohabitants, or colleagues (r = 0.49).

There’s no wonder their ad revenue keeps on increasing every year—from 2015 to 2021, they grew at an average annual growth rate of 36.7%. It's incredible to think that a machine, powered by algorithms, can outshine our flesh-and-blood relationships when it comes to understanding who we really are. That makes for one powerful advertising model.

The reason, therefore, why personalisation won't wither on the vine is that advertisers have already proven that targeting and relevant messages work infinitely better than the alternative – mass, undifferentiated targeting and messaging. According to the Interactive Advertising Bureau (IAB), they found that targeted advertising based on consumer interests and behaviours led to a 40% increase in brand recall and a 50% increase in purchase intent compared to non-targeted advertising. Studies by Neilsen and Harvard Business Review concur as do numerous other studies in the field.

Like personalisation as a concept, more targeted advertising as a statement feels commonsensical. And in the commercial language of communication, it's a reasonable assertion to suggest that ultimately, there’s just too much money to be made in personalisation for it to simply stop. It’s a multi-billion dollar business.

And so, we reach a primary paradox, in my opinion. One where personalisation is being eroded because it’s commercialised, but it’s only alive because it’s commercialised. The personalisation-commercial paradox.

[1] Youyou W. Kosinski M. Stillwell D. (2015). Computer-based personality judgments are more accurate than those made by humans. Proceedings of the National Academy of Sciences of the United States of America, 112(4), 1036–1040. 10.1073/pnas.141868011225583507