Interviews, insight & analysis on digital media & marketing

Is the era of one-to-one communications over?

By Cristina Extremo, Performance marketing manager at 5874 Commerce

Personalisation in digital marketing has achieved an inflexion point over the last few years. Users have become more interested in knowing how their data is processed, and privacy protection is starting to become a widespread concern.

Marketers believe that personalised marketing is critical for a campaign to succeed, however users are expressing concerns about their privacy data, especially after data misuse scandals such as Cambridge Analytica and Facebook in 2017. It is important to find the balance between delivering personalised experiences and not invading personal privacy.

The coronavirus pandemic has changed the way goods are consumed. In April 2020, users in the UK spent an average of 4h 2 min online each day, increasing their online time by 37 min compared to January this year. This means that users were also more exposed to online advertisements, and personalisation in this case became more important. 

However, over the same period, companies have invested less money into advertising. Forecasts from WARC and the AA predict a 16.7 percent decline in total advertising expenditure growth. Lower investment in advertising requires more efficient ads to maximise ROAS, and that is exactly what personalised targeting achieves. 

Marketers tend to hyper-personalize communications, in an attempt to get higher quality leads. However it is important not to make the user feel like their data has been misused or targeted at the wrong moments. One example is users being served an ad for Father’s Day, when their parents have recently passed away.

On the other hand, many users feel comfortable about the power they have on their data sharing. Seventy-three percent said they were “confident that they could manage who has access to their personal data online”. For data storage, the use of cookies is the method most adults are aware of; the use of data from apps is the one which online consumers acknowledge the least. Forty-four percent of those who said they were confident in managing their personal data said they were unaware of data collection through smartphone apps. These users that are more comfortable navigating online are also the ones that are aware of personalised advertising (61%) and are more likely not to mind if organisations use their data for content or ad personalisation. 

This is when transparency comes into play. It is important for advertisers to be clear about the use of data, as users are less likely to mind seeing an ad if it is relevant to them. Sometimes this relevancy can increase the ROAS for a campaign, by targeting for example past users who made a purchase and offering a similar product. This tactic is used perfectly by Amazon, where the cross selling provides a big part of their revenue.

This is an issue widely acknowledged in the European Union and led to the launch of the GDPR guidelines in 2018. The objective was to secure data usage and put the onus on companies to let the user acknowledge how their information is going to be used. This includes data storage by their own company or by third parties such as Google or Facebook.

Ad personalisation is not a bad practice as it can add value to a user’s online journey, however it is essential to inform the user and make them feel confident and in power of how and when their data is stored and used.