Why personalization fails

Personalization is everywhere, especially online, where companies retarget you with banner ads if you visit their web site, or bid on competitor terms that pop up on finance pages (see the nice play by Blockbuster, above), or even chase you if you don’t click on an ad by figuring out a lot about who you are. For instance, savvy digital media buyers can run a few hundred thousand banners on a WSJ.com section read heavily by CEOs and pay a small fortune — but then tag the CEOs’ computers to serve additional banners downstream, wherever those CEOs go online, at 90% savings. In essence, this “lifts” the audience from WSJ, aligns offer with the target, and slashes media costs.

The premise of all these tactics is personalization lifts response. But does it? More than a decade ago I worked with Don Peppers, the brilliant father of 1to1 marketing who helped launch the CRM craze in the 1990s (before the term Customer Relationship Management became an acronym for software baloney). Personalization assumes that an offer with higher relevance, based on your personal and unique needs, will grab your attention, convert you to a sale, and keep you as a loyal customer.

Yeah, 1to1 can work, but it’s only one aspect of three major prongs of competition — the others being price (or perceived value) and product (where innovation is hot). Wives love husbands, but some still chase younger boyfriend or girlfriend products over personalized marital service. Apple doesn’t give a damn about personalization, for instance, yet makes a fortune in profits off of hot product designs. (I’ve often thought the reason iTunes’ interface is so horribly cluttered is Apple has found confusion leads to more sales as we click on random songs/videos we didn’t know we wanted). Consumers want deals and cool product designs; personalization cannot address those aspects.

No one ever, ever, ever asked for a two-door minivan or a cell phone with a camera or a flat computer screen with no keyboard.

Personalization does not lead to market revolutions.

Another problem with personalization is entire industries make money off waste. The cable industry, for instance, pushes more than 166 :30 second spots to a typical U.S. consumer each day (based on 5 hours and 9 minutes of TV time and 16-18 spots per hour). If you could get only the personalized ads you wanted, you might put up with 10 or 20 spots — but the remaining 146 spots would vaporize and all the ad revenue with it. Media intermediaries make boatloads off of waste. True targeting on TV, the current king among consumer media consumption, would erase billions of dollars from the ad industry.

Finally, people are not unique data sets. We have modality. I’m constantly frustrated by Amazon.com offering me Legos or Oprah books when those recommendations are based on shopping I’ve done for others. Amazon, like Netflix and others who attempt personalization, needs to provide a modality dial. Tonight I may want food, or history, or a book on technology, or sex, or a spy film. I have no idea who I will be in a few hours.

So keep trying, marketers. We try for our clients too. But it’s hard, when your carefully crafted personal offer is sent to a moving target.

We are humans, and we contain multitudes.

Inspired by +Len Kendall

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

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