When it comes to personalizing promotions, caution and moderation are key for marketers. Customers can quickly get uncomfortable seeing too much of their behavioral data used to sell products or services. Whether or not these tactics operate within the boundaries of the law is irrelevant. Companies don’t need to break the law to garner negative press coverage from what the public might perceive as a violation of privacy. Adopt an over-eager approach, and businesses risk damaging their brand or losing customers.
That said, many companies investing in personalized ads continue to yield positive returns. As a result, more are bringing personalization to the center of their product and marketing strategies. In fact, a joint study by Evergage and Researchscape International found that 96% of organizations polled believed that personalization could help advance customer relationships, but only 45% felt they were using it effectively. With more than half of the market struggling to find their footing, many are discovering just how costly things can get when a personalization initiative oversteps its bounds.
Creeped Out Customers
Personalized advertisements are constantly skirting the line between resonance and overfamiliarity. Unfortunately, marketers often don’t know which side they’re on. CEB Marketing and Communications polled 390 consumers to find out of how users felt about “online ads that use details about what I’ve done.” 73 percent answered negatively, with 49 percent specifically saying they found it “creepy.” When the same question was posed to 58 marketing professionals, only two percent believed consumers would be uncomfortable with the practice. 62 percent believed that consumers would value the tailored approach, when in reality, only one percent of consumers said they saw the value. To keep from being negatively labelled, brands need to pay close attention to popular sentiment when building their personalized campaigns.
Lower Retention
Once they’ve integrated personalization tactics, many publishers are tempted to crank up communication frequency. It turns out, however, that too much of a good thing can frustrate users just as easily as a one-size-fits-all approach. After receiving a slew of personalized push notifications, some of which mentioned him by name, senior staff writer at WIRED David Pierce said that “allowing an app to send you push notifications is like allowing a store clerk to grab you by the ear and drag you into their store.
You’re letting someone insert a commercial into your life anytime they want. Time to turn it off.” Despite notifications getting more personalized, this is becoming an increasingly common attitude. Anything other than the occasional tailored notification has the potential to drive customers away.
Legal Fees
In extreme cases, overzealous personalization efforts can lead to exorbitant litigation costs. In 2016, mobile ad network InMobi was accused of ignoring their users’ privacy privileges. Plaintiffs claimed InMobi was wrongfully using location data to woo potential advertisers looking to make an impact on specific geographic markets, which would have violated the Federal Trade Commision Act. InMobi wound up paying out a seven-figure settlement to get the case resolved. While the location services can enhance the capabilities of mobile devices and enrich user experience, taking an indelicate approach can lead to major financial repercussions and PR backlash.
Marketers need to be intimately aware of privacy agreement specifics before diving into personalization, and even industry leaders have made mistakes. In 2012, Google paid a $22.5 million fine when the Federal Trade Commission determined that it had violated an agreement relating to data collection practices for mobile Apple users a year prior. Google agreed to implement an opt-out clause for Safari users that would prevent access to the cookie data that allowed them to deliver targeted ads. Even for Google, these fees are no joke, and past blunders should serve as cautionary tales for marketers getting started with personalization.
Brand Damage
In 2012, big-box retailer Target discovered just how much damage a personalization misstep can do to a brand. In an article with the New York Times, a statistical analyst at Target named Andrew Pole described the value of using behavioral data to identify pregnant women as early as possible. “We knew that if we could identify them in their second trimester, there’s a good chance we could capture them for years,” Pole explained. “As soon as we get them buying diapers from us, they’re going to start buying everything else too.”
The article took an in-depth look at all facets of data-driven customer engagement practices, including the story of how one disgruntled father took issue with coupons for pregnancy products being mailed to his teenage daughter before he himself knew that she was pregnant. This particular detail caught the attention of Kashmir Hill, a staff writer for Forbes, who published the more provocatively titled, “How Target Figured Out A Teen Girl Was Pregnant Before Her Father Did”. The article went viral, sending Target into damage-control. When the dust settled, irrevocable harm had been done, haunting the company to this day as it continues to struggle with declining sales and bankruptcy.
When asked when it is appropriate to incorporate personalization into marketing models, Evergage CMO Andy Zimmerman said, “Done well, personalization should add value for your visitors, helping them find what they are looking for or guide them in their journeys. Personalization ‘just because you can’, on the other hand, is never a good idea.”
All modern marketers would do well to take this to heart. At this point in commercial history, all personalization tactics come with some degree of inherent risk. Businesses still willing to dive in should hope for the best while preparing for the worst.
