Personalization: The Path to Digital Media Success

May 31, 2016

Personalization ROAS

Advertisers today are investing rapidly in digital media. According to eMarketer, global digital ad spending will account for 45% of all ad spending by 2020. It makes sense, then, that as advertisers increase their focus on digital channels, they are under increased pressure to prove a return on their investments. In other words, digital advertising has to actually work.

The unfortunate reality, though, is that digital display advertising drives remarkably low click-through rates. Data compiled by Smart Insights indicates the average global CTR for digital display ads is just 0.17%, which translates to fewer than two clicks per 1000 impressions. Moreover, marketers are operating in the age of the customer experience. In fact, eMarketer shared research that found 81% of consumers want their online shopping experiences to be easy, personalized and relevant.

So what is the solution to this abysmal performance result and increased consumer expectations? The answer is addressability. Rather than tossing millions of dollars into content that is irrelevant to users, advertisers should shift toward people-based marketing, which enables them to leverage their first-party data to target known customers in real-time across channels and devices. Moreover, people-based marketing allows advertisers to personalize the customer experience.

Personalization: A Consumer-Driven Reality

Personalization is the talk of the town and smart advertisers shouldn’t ignore this important conversation. According to Forrester, one of the top 10 critical success factors in 2016 will be the level and quality of personalized experiences.

And marketers are placing such heavy emphasis on personalization because consumers are demanding that they do so. In fact, according to Marketing Magazine, 70% of 18-24 year olds in the U.K. stated that the brands that fail to personalize their marketing will lose them as customers.

This trend isn’t limited to personalizing ads, though. Consumers want their entire online shopping experience to be tailored to their needs, interests and past purchases. As data from AgileOne revealed, more than 79% of U.S. consumers and 70% of U.K. consumers expect personalized experiences online from the brands they shop with, and more than 50% of consumers in both the U.S. and U.K. expect e-commerce sites to remember their past purchases.

First-Party Data Leads the Way

Of course, marketers can’t personalize their advertising and brands can’t personalize online shopping experiences without a single view of their customers. They also have to be able to apply what they know about those individuals to create customized messaging and experiences across channels.

The good news is that consumers are willing to share their information with companies that respect their privacy and leverage that insight to benefit the shopper. Research from the Columbia Business School highlights this reality. According to the data, 75% of participants were willing to share their personal information with brands they trust in exchange for a product or service they value. Moreover, 80% were positively influenced into sharing their data with companies when they received special offers or data-enabled benefits, including reward points and product recommendations.

This in mind, the key to creating personalized ads and experiences is to tap into rich offline first-party customer data to build holistic profiles that are actionable across channels.

The Result: Improved ROAS and Customer Experiences

Personalization is one of the core capabilities that people-based marketing enables, and advertisers who succeed in achieving it will see improved ROAS and gain more loyal customers. In fact, Experian found that personalization helps marketers achieve a 158% increase in CTRs, a much needed improvement for advertisers stewing over the average 0.17% that defines their current realities.

And as a whole, people-based marketing has yielded superior performance results. According to a recent study by Signal, 60% of advertisers reported improved click-through and conversion rates when they turned to addressable media. , and advertisers who create personalized experiences for addressable audiences will boost their credibility in the board room.

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