Audience Targeting
August 10, 2016

Personalized Programmatic is the Future of Advertising – Here’s What You Need to Know

Studies show that consumers strongly prefer personalized experiences, and it’s becoming more important than ever for marketers to provide these customized experiences to remain competitive.

By the end of 2015, programmatic ad spending reached almost $15 Billion, and is expected to reach at least $20 Billion in 2016. On top of that, an eConsultancy study found that 62% of online retailers are practicing some form of personalization. As we move into a brave new world of highly targeted advertising, there is no doubt that personalization and programmatic will continue to fuel one another.

“Going forward, programmatic will be synonymous with personalization,” explained Ben Kartzman co-founder and CEO of Spongecell. “As an industry, we now have the potent combination of creative and data, supported by powerful technology to finally engage with consumers at the right place at the right time in the right context.”

What Powers Personalization?

Successful personalization comes down to how much you really know about your audience. Many marketers know the basics of who they are targeting—for example, age and gender demographics. However, more marketers are discovering that having a lot of little details can be essential for creating a truly personalized experience.

Here are some examples:

  • Shopping behavior: What kind of products do they typically purchase? Are they frequent browsers, or do they only shop when they’re ready to buy? How much do they typically spend per order?
    • Why it’s important: Sometimes looking at shopping behavior illuminates unexpected details about how and why your audience buys—details which could not be inferred based on demographic information. For example, one might naturally assume shoppers with low or average household incomes make up the vast majority of deal-seekers, but Hitwise (a division of Connexity Inc.) found that 39% of people who search for coupons have household incomes of $100,000 or more. *
  • Interests: What activities, hobbies and TV shows do they like? Are they technophiles? Do they love popular culture? Are they into photography? Do they like food and cooking?
    • Why it’s important: In some cases, your audience’s interests and hobbies are directly relevant to the items you’re selling, for example people who love to cook are more likely to buy a slow cooker. However, beyond the obvious connection between interests to product categories, Google found that consumers actually choose brands who engage with them based on their passions and interests 42% more often than brands who only urge them to buy a product.
  • Geo-locational: Where are these consumers located? What’s the weather like where they live? What state or region are they from?
    • Why it’s important: Online shopping sometimes feels like the great equalizer, but studies find consumers from different states have widely different spending behavior. Although your online shoppers are buying from one place, their locational experience can still significantly affect their behavior and needs.
  • Life stage: Did they just start college? Or buy a house? Or have a baby? All of these will deeply affect consumer’s interests and purchase behavior, sometimes in unexpected ways.
    • Why its important: Studies show that a life stage transition is the time when a consumer’s brand loyalty is “up for grabs” —knowing the life stage of a consumer offers an incredible window to capture their attention, and tailor your offerings to their priorities in that moment.

How Specific Do You Need to Get?

Does personalization require exact one-to-one specificity? Do you need to know every single detail about a consumer and their behavior in order to personalize an advertisement? Not necessarily.

“It doesn’t have to be down to the exact Callaway golf club that a consumer shopped for online—to personalize at scale, you need the right mid-level and higher-level buckets,” says Christopher Curtis, VP of Business Development, Data Products at Connexity. “Knowing several points about a consumer, for example that he is male, shops for golf clubs, and lives in Southern California can allow you to triangulate these data points to create a compelling ad.”

Each of these data “buckets,” from mid-level to high-level, are filled with customer data—which can be used in combination for powerful targeting.

Targeting vs. Personalization – Know the Difference

Targeting and personalization represent two different ways to apply the data you’ve collected, and both are important for effective programmatic advertising. Targeting refers to who you are seeking to engage, while personalization refers to what you choose to engage them with (i.e. the creative, the ad placement, the experience, etc.).

Although they feed off one another, targeting and personalization are ultimately two different concepts. Marketers who are serving ads programmatically should prioritize how to target their audience first, and then decide how personalization can further boost the engagement.

Let’s say Home Depot taps into a data segment of consumers who have shopped online for flooring supplies in the last 2-3 weeks, and serves them an ad highlighting an upcoming sale in their home improvement department—that’s targeting. If their ad features different flooring supplies, promotes offers for the latest hardwood flooring collection, or provides the shoppers with details about the closest neighborhood Home Depot—that’s personalization.

Once shoppers click on an advertisement, it’s also possible to personalize the website experience. If a brand like Walmart wants to increase engagement on its website, it could leverage its own customer data to personalize the online experience. If one customer often shops for furniture and home goods, and another customer shops for sporting goods, those behaviors could trigger different content, landing pages or lead offers, even a very different home page experience for each of them.

Personalization and the Future

In this complex data-driven ecosystem, no marketer can master personalized programmatic alone. The best personalized marketing campaigns are often the result of powerful teamwork between marketers, brands, agencies and vendors.

At the end of the day, only the brands who demonstrate a deep understanding of consumers’ needs and interests will be able to capture their attention and retain their loyalty—this can only be achieved through consistent relevance, customization and personalization of marketing and the online experience.

As Curtis explains, “I’ve been an Amazon client since 2004 and they know more than anyone else about my purchase history and shopping habits, so they have the huge leg up to make my experience relevant. Relevance is what holds people’s interest. It’s becoming more important that you leverage data to personalize your ads to my interests and deliver the right message to move me down the purchase cycle. If you don’t, somebody else will.”

* About this Data: The Hitwise® AudienceViewTM platform delivers insights into consumers’ online behaviors and searches combined with survey research measuring their attitudes, lifestyles and shopping preferences. Data for statistics cited in this study were collected from the online panel of 10 million Americans during the four weeks ending January 12, 2016.