Personalized advertising a virtual reality
globeandmail.com
New technology will soon allow firms to gear messages to audiences of one
By KEVIN MARRON
Special to The Globe and Mail
Friday, July 26, 2002 – Print Edition, Page B9
As the hero of Steven Spielberg's movie Minority Report walks down the street, he is bombarded with messages from talking billboards that address him by name.
The film is set 50 years in the future, but its vision of a world in which people are pursued by personalized advertising messages is firmly rooted in today's marketing technologies and trends, according to John Pliniussen, associate professor of e-marketing and "e-nnovation" at Queen's University's School of Business.
It's a practice that Prof. Pliniussen calls "shadow marketing." He says the technology is already available through cellphones and wireless messaging to track people's whereabouts and send them messages geared to their personal interests and present circumstances.
As radio and satellite-tracking technologies are incorporated in cars, electronic-cash cards, and portable and wearable computers, consumers will find themselves in a world where "you are always connected, always being tracked," he says.
"There is no question, the industry is driving to build relationships on a more individual basis," says Michael Wood, managing director of the Toronto-based advertising agency Leo Burnett Co. Ltd.
Personalized advertising that takes advantage of the interactivity and location-tracking capabilities of wireless messaging and other new media is still in its infancy but it represents the beginning of a major trend, according to Rob Carscadden, president and chief operating officer of the Montreal-based marketing-technology company Zaq Interactive Solutions Inc.
"This is the most fundamental shift in marketing in over a hundred years," he says.
Mr. Carscadden, a former vice-president of marketing for the snack food giant Hostess Frito-Lay Co., a division of PepsiCo Inc. of Purchase, N.Y., says he still believes in the power of mass marketing. Nevertheless, he predicts a massive shift in advertising away from mass media toward what he calls "a personalized direct marketing model."
"It's far more efficient than mass communications," Mr. Wood says. "With increased targeting, you are able to track whether or not the ads lead to a purchase."
People have already got used to the idea of receiving personalized e-mail marketing messages, as a result of signing up for loyalty programs or services on the Web, Mr. Carscadden says.
Soon, he says, expect to wake up to clock radios that will blend personalized advertising messages with traffic reports tailored to our daily commutes.
Instead of watching regular broadcast commercial television, we will be tuning in to interactive programming with advertising tailored to our personal interests and tastes.
Other technology that is already being developed will use electronic tags embedded in key chains, handheld or wearable computers to identify shoppers as soon as they enter or pass by a store, making it possible for computerized customer-relations systems to send them personalized wireless messages about deals that may interest them, he adds.
Prof. Pliniussen says that privacy legislation will ensure that this shadow marketing is carried out with the permission of the consumer, who will always have the ability to turn it off.
But, he predicts, a growing number of people will choose to stay connected as they become more dependent on services, such as links to home-security systems or Webcams in daycare centres.
Jonathan Copulsky, a partner with Deloitte Consulting, identifies three kinds of personalization: messages that simply address people by their correct name and title; messages that also incorporate an understanding of the consumer's past purchasing behaviour; and messages that reflect insights about the consumer's fundamental needs and wants.
He says technology for recognizing consumers and addressing them by name is already well developed on the Web using "cookies" and on wireless devices through radio frequency identification (RFID) technology.
Technology for analyzing past behaviour and generating personalized offers is also improving, he says, citing as an example Amazon.com Inc.'s collaborative filtering that recommends books to customers by comparing the books they bought to other purchases made by customers who have bought the same books in the past.
This technology can misinterpet, however, Mr. Copulsky adds, noting that Seattle-based Amazon consistently misreads his interests because he usually buys books as gifts for other people.
The third kind, personalization based on people's needs and wants, he considers a work in progress, as the required artificial-intelligence technology is still being developed.
While targeted advertising may be more effective, Mr. Wood says today's efforts often fail to hit the mark because they do not take personalization far enough.
He says personalized messages may get your name right and contain some information about your past purchases, but they tend to slot you into a category of consumer, rather than respond to your individual interests and tastes.
"They are addressing you personally and clustering you as a group of people who like to watch action movies or take vacations," Mr. Wood says.
Creating truly personal marketing messages will not only involve improved technologies for analyzing information and generating timely offers, he says, but also require strategies for building long-term relationships with customers to find out what motivates them and to discover how their interests change over time.
He notes that this involves making a large investment in understanding individual customers. Mr. Wood says this would obviously make sense for financial institutions and perhaps car companies with big-ticket items for sale and potential lifelong customers. But vendors of low-cost goods may question whether personalized marketing is worth the expense.
In the long run, that may be less of an issue since the cost of the technology required for personalization is dropping dramatically, according to Mr. Copulsky.
So, will the industry actually launch talking billboards? Mr. Wood thinks not, because it would be too confusing to have personalized messages delivered to so many people passing by a billboard at the same time.
Nevertheless, while he says there will always be a place for mass market messages, he believes personalization will continue to take hold. And, Mr. Copulsky says, marketers will continue to divide and subdivide the mass audience into more and more segments until they arrive at segments of just one person.
The personal touch
Personalized marketing is highly attractive to advertisers because it helps build relationships with individual customers, is more cost effective, and yields measurably better results than mass media advertising, according to Jonathan Copulsky, a partner with Deloitte Consulting.
"We do not see many consumer-oriented businesses where the idea of personalization is not relevant," he says.
A recent study by the Chicago-based marketing company Yesmail Inc. showed that e-mail marketing campaigns with targeted, personalized messages get close to three times the response rate of untargeted campaigns. The study analyzed 90 million messages delivered in the first quarter of this year and found that e-mails using personal information -- such as the name, interests, gender, age and purchasing history of recipients -- got a 14.8-per-cent response rate compared with 4.7 per cent for untargeted messages.
Mr. Copulsky says that when one of his clients, a major packaged goods company, used a personalized e-mail ad campaign, purchases by those who received it were up 15 per cent from previous non-personalized campaigns. |
