You, as an internet user, who has surfed the internet, shopped online or even typed a certain word into google,  would have interacted with a recommendation system. It’s becoming more and more apparent these days that this is the sort of digital marketing that is paving our online future. As Neal (2006) noted, this method focuses more on what the customer needs and wants rather than what the company wants to sell. This can also be called ‘database marketing’, which is described by Kauffman (1988) as the collection of information about past, current, and potential customers to build a database to improve the marketing effort. The information includes demographic profiles, consumer likes and dislikes, taste, purchase behaviour and lifestyles.

Amazon is probably the most renowned company who uses this tool. They have stated that this form of marketing generates an additional 10% – 30% of revenue. Other companies such as iTunes (Genius Playlist) and Netflix also use this as a marketing channel.

Amazon and other companies are able to monitor how people react to the marketing strategies and campaigns through every click of their mouse. This is vital data for them as they can then ‘group’ people on their similar interests and send over the relevant items. This can be backed up by the marketing theory stated by Kotler (1990), By specialising along market, customer, product, or marketing mix lines, a company can match the unique needs of the customer.

Positives 

This allows companies to build a passionate and trustworthy audience. Content personalisation helps build a relationship with the business and consumer as they will feel more valued and respected as a customer.

In regards to Amazon, if there is an easy way for a customer to buy something through the personalisation of the website, they would be more likely to buy it. As seen below, Amazon use a ‘1 click buy’ option which allows an efficient checkout service. Resulting in more purchases from the company.

Visitors who return to a website only to see the same offer over and over are probably not excited. Personalisation through dynamic and different content however, can present something new and relevant to their interests, to visitors each time they arrive on your site.

Negatives

While personalised marketing can reap in benefits for knowing your customer, it does come at a price. Recommendations must be current to be able to maximise engagement to the customer. Especially if these personalisations are through the channel of e-mail. What if the product has become out of stock while the e-mail is being produced to send out? What then?

Also, from an advertiser’s perspective, personalized advertising is typically more expensive than other types of online advertising that is less targeted. The increased costs are generally based on a combination of enhanced benefits of more targeted audiences as well as the need of the ad server to cover the expense of using behavior-monitoring software. As with any advertising alternative, advertisers need to consider the efficiency of paying a certain cost and reaching more or less targeted consumers.

Recommendations

Shani & Cahalasani (1992) suggest an idea that there is a strong resistance from traditional marketers who undertake traditional marketing strategies. However, as a global economy, there is a need for change and the need for people to accept this is important if it is to move on.

There are 3 key areas in which people need to address to perfect the correct personalisation marketing strategy:

• Audience – Knowing your audience is most vital for this marketing strategy to be a success. If you don’t, then you can’t be completely sure in what their favourite interests are.
• Intent – The key to implementing and delivering personalisation is allowing a customer to reveal their intent.
• Relevancy – Show why the message you are presenting is relevant to your customers. This will keep your customer interested in what you are selling and keep purchasing through your website.

References

Neal, B. 2006, Personalized Marketing, Dental Lab Products, vol. 31, no. 2, pp. 52-52,6.