Hike #1: The Role of Personalization in Todays Online Advertising and Marketing Strategies

Looking at the past decade, marketing opportunities have expanded mainly in the direction of online content. This is primarily due to the explosive growth of social media platforms such as TikTok and Instagram. This opens up many opportunities for brands who want to market their products and services online. One of these opportunities is the vast amount of data that companies can gather from consumers to set up an online profile so that their targeting strategies can be more accurate. This helps brands utilize their advertising resources to create a personalized ad rather than a more generally targeted one.

Why personalized ads?

One reason personalized advertisements and interactions with consumers have become more important is the change in consumer behavior caused by the COVID-19 pandemic. As a result of the lockdowns and hybrid work forms that originated from the pandemic, online traffic peaked immensely during that period. This also caused consumers to be more exposed to online advertising and increased the need for personalization for brands to stand out from the competition. As a result, consumers' expectations have changed because 71 percent of consumers now expect interactions with companies to be personalized (ads, customer service, etc.). And 76 percent of customers will get frustrated if these interactions aren't personalized (Arora, Ensslen, Fiedler, Liu, Robinson, Stein, Schüler, 2021).

Another reason for personalization is that it can be highly rewarding if done right. For example, customers are more likely to stay loyal to a certain brand if the content is tailored to their needs. This is due to customers' expectations that they won't be informed about offerings that are irrelevant or not interesting to them. A benefit resulting from this is that the marketing budget is used optimally, and no resources are wasted as every offering to the customer is relevant to them (Morley, 2024). Other benefits that might result from personalized advertising are:

• Increased Click-Through Rates: The number of clicks the ad receives divided by the amount of times the ad is shown.

  
  

• Improved Conversion Rates: The number of users who have completed a desired action divided by the total audience exposed to the ad.

  
  

• Valuable Data that can be analyzed for future marketing campaigns. Consider which ads were the most effective and why to be more efficient in the future.

(Team, 2024)

The importance of segmentation in achieving personalized advertisement

When devising marketing strategies, the word 'segmentation' is something you will encounter numerous of times. It is of the utmost essence for successful marketing practices. Therefore, it comes as no surprise that it is also essential for creating personalized advertisements. Segmentation consists of four variables: Geographic, Demographic, Psychographic, and Behavioral. All four of these must be considered separately for segmentation to be successful.

Geographic Segmentation concerns itself with the customers' location and shared characteristics of customers based upon this location. It also divides the entire target market into smaller regions with similar characteristics in order to prevent inefficient targeting.

Demographic Segmentation aims to group consumers based on readily observable information such as age, education level, occupation, income but also geographical location.

Psychographic Segmentation focuses on grouping customers based upon their beliefs, values, lifestyle, social status, activities, interests and other psychological factors.

Behavioral Segmentation targets customers by grouping them based upon, you probably guessed it, behavior. This can range from their choice of products/content to how they interact with a store, an app, or a website.

In order to succeed on each area of segmentation, a customer profile must be devised and data must be gathered in order to know exactly how to target customers personally and tailor your content accordingly. Useful piece of information to know about a person would be their self-concept, which is devised of who you really are, how you see yourself, how you think others see you and who you would like to be. Other useful information for personalized advertisement can be a consumers reference group(s). These are the groups, categories or classes of people that individuals believe they belong to, whether or not they actually do. Such information might be recovered by applying website tracking tools, such as Google Analytics. But most likely you will gather a better insight into a customers demographics, the website traffic and lead sources to the website.

Different Types of Personalized Advertising:

Now that you've gained an insight into personalized advertising and why it can be useful, I will provide you with some inspiration if you consider to use personalized advertising to your advantage. Different types of personalized advertising that you can use are:

• Integrating chatbots or live chat into your website so customers can have a real-time 'personalized' conversation.

• Personalized e-mail or Text messages to make the consumers feel seen.

• Implementing AI-tools in order to extract information from customers that you can use in future advertising campaigns

• Product recommendations, to make sure that every consumer receives a relevant offering based upon previous purchases or interests.

(Hakob, 2024)

Did you enjoy this article? If so, then stay tuned because there will be a new article every week! Until next time :)