Balancing what you can do with what you should do
With so many new data-driven and targeted marketing techniques now possible, businesses need to be careful they are not simply creating smarter and smarter spam. A recent study reveals some personalised techniques are doing more harm than good.
Developing a simple and effective digital communications strategy isn’t easy. The leadership of a business must have a clear understanding of customers’ needs, the experience they want to create, and the steps required to get there. This process will undoubtedly take time, and to do it well, organisations need to focus on the long game.
However, the pressure of demonstrating quick wins’ and short-term performance reporting distracts many businesses from the longer, more strategic view.
The current reliance on behavioral targeting is one example of this. Most of us have had this experience: You start searching online for a product or a service, then visit a company’s website to browse. Not long after, you’re being bombarded with advertisements from that company.
This is called ‘behavioral targeting.’ It allows advertisers to target consumers with personalised messages based on browsing history and demographic information. It has become increasingly inexpensive and straightforward for businesses to collect and track this information. It is then used to drive short-term tactical activity.
But a new Stanford Graduate School of Business paper, written by Professor Pedro Gardete and Yakov Bart, a professor at Northeastern University, has uncovered an exciting insight about highly targeted and personalised ads – namely, they do not translate to higher profits for companies. It’s not surprising that the research shows consumers find those ads frustrating and ultimately meaningless.
The research used game theory to build a mathematical model. This model enabled them to look at the impact of various advertising scenarios. It revealed that, in many cases, the most effective approach for consumers is to keep information private and for businesses to track less of it.
As Gardete says: “It might seem counterintuitive to say to a business, ‘collect fewer data and disclose it,’ but being open about what data a company collects is actually to its advantage.”
This research suggests that many businesses will need to rethink their digital tactics and overall strategy.
At Alyve, when talking to clients and marketing professionals, we describe the personalised marketing approach discussed above as creating ‘smarter and smarter spam.’ It may work for a short period of time, but the eventual outcome means eroding brand trust.
Creating genuine and meaningful competitive advantage in the digital world means focusing on generating long-term trust with your customers. Companies need to clearly define what customer data they need, be transparent about it, and, importantly, understand how they will use it to deliver value back to the customer.
Those responsible for shaping and driving digital change must be freed from the demands of short-term sales reporting. Leadership should encourage them to develop a long-term vision, establishing KPIs they will hit.
To help sell in a long-term strategy, we suggest you:
Develop a customer-centric financial model
Understand and highlight which techniques will positively impact that model, both short and long term
Clearly understand and illustrate where potential risks lie (many of the techniques that will provide a short-term gain may present significant long-term risks)
Map out a staged ‘maturity model’ that creates a narrative that stakeholders can support
Report on progress frequently
The world has changed. Be bold and focus on your customer. Design for the long term. And remind your management team why chasing short-term quick wins will erode the trust of your customers.