Facebook’s landmark $5 billion dollar settlement with the FTC over user privacy isn’t punishment enough, according to some lawmakers. The criticism comes as social scrutiny of Silicon Valley’s data privacy practices rises and fines and regulation loom over the data economy.
A recent GetApp survey found 91% of U.S. consumers feel ads know too much personal information about them. Meanwhile, Gartner research (available to clients) shows 56% of marketing leaders increased their spending on personalization in 2018. Consumers say advertisers know too much about them, yet businesses continue investing in personalized marketing.
Below we explore how consumers understand and feel about personalization, why people like to receive personalized messages, and ultimately whether the increasingly common practice of marketing personalization actually works.
- 53% of consumers report that online advertisements have become more relevant to their lives over the past three years, suggesting personalization is working in some capacity for marketers.
- 95% of people believe they are tracked online based on past purchases.
- 46% of consumers report to have encountered ads for products they never searched for online but talked about offline.
- Many people limit their exposure to advertising and the information they share with advertisers: 52% of consumers report using an ad blocker while online and 29% say they are unwilling to share any personal information with marketers in exchange for more relevant offers.
- Businesses should exercise caution when investing in marketing personalization. It is important to focus on the foundational customer data that will inform personalization strategy and avoid rushing to personalize all forms of customer outreach at once.
How do consumers feel about marketing personalization?
An overwhelming majority of consumers feel that advertisers know too much about them. This isn’t surprising: As advertising transitioned from a communications-based practice to one driven by technology and automation, an unprecedented amount of personal consumer data has been collected and processed. In the absence of regulation and transparency, it’s only natural that people feel advertisers are invading their privacy.
But this doesn’t mean people dislike personalization. Like most things, consumer sentiment varies wildly depending on who you ask and what you ask them. For example, our survey also found that 53% of consumers feel advertising has become more relevant to their lives over the past three years, and 48% said personalized marketing helps them with product discovery—both clear value-adds for consumers.
By exploring the broad preferences of U.S. consumers, businesses can better understand the types of personalization that will work best for their target customers.
Why do people like to receive personalized messaging?
The most popular reasons for receiving personalized messages among U.S. consumers are promotions (58%), account updates (48%), order updates (35%) and new product arrivals (35%). We also saw 17% of respondents state they prefer not to receive personalized messages for any reason.
How does age impact the effectiveness of personalized marketing?
Younger consumers are generally more receptive to personalization. The number of people that feel advertising has become more relevant to their lives over the past three years has an inverse relationship with age.
This trend is shaped in part by digital natives, or people familiar with digital technology and the internet from an early age. Since their youth, consumers from the Gen Z and Millennial generations have built vast digital footprints that help advertisers better understand and accommodate their preferences. Younger people also tend to generate more data as avid users of the internet and social media.
Find overlap between consumer wants and business goals
- Find overlap between your business goals and the reasons customers find personalization useful. This will make trading personal data for more relevant offers a worthwhile exchange for your customers.
- Consider surveying a sample of existing or prospective customers to better understand their particular demographics and preferences, which may differ from U.S. consumers broadly.
What personal information will consumers exchange for more relevant offers?
Consumers are most willing to share their gender (52%), age (43%), and email (42%) with advertisers in exchange for more relevant offers. We saw 29% of respondents say they were unwilling to provide any personal data in exchange for more relevant offers. People appear more reserved about sharing information that relates to family such as marital status (23%) and how many children they have (18%).
What benefits do consumers receive from personalized marketing?
The benefits most consumers get from personalized marketing are help with discovering new products (48%), an improved online shopping experience (31%) and a reduction in irrelevant ads (28%). Additionally, 24% of people said they do not receive any benefits from personalized marketing.
Provide something of value to customers in exchange for their personal information
- Determine what information is necessary to build a foundation of customer data that will enable personalization for your business.
- A Marketing Land survey found that 58% of U.S. consumers are “data pragmatists” and will trade their personal data for the right benefits or under the right circumstances. Consider methods of data collection that give customers or prospects a clear incentive (e.g., content, information, or discounts) in exchange for their time and personal information.
- Avoid asking customers for information that you don’t have a specific use for. Shorter forms have higher conversion rates, and limiting the amount of customer data your business houses will mitigate exposure if a data breach occurs.
Does marketing personalization work?
With 62% of consumers saying they’ve opened an email in the past year simply because their name was in the subject line, it’s clear that personalization works even in its most basic form—but how well depends entirely on how you use it. Consider the elements mentioned above, such as the demographics and preferences of your customer base, as well as your own business goals, to develop a personalization strategy that is tailored just for you—and of course, your customers.
More articles on customer relations trends and technology:
- Understanding Data Science and Analytics in Marketing
- How Selecting Software Is Like Hiring a New Employee
- Don’t Panic: At Least 20% of Your Employees Don’t Believe in Your Product
In July 2019, GetApp used Amazon Mechanical Turk to survey 392 consumers. Survey respondents were required to have some online shopping experience and reside in the United States.