Personalization: Opportunities, Pitfalls and How To Get it Right

Facebook Business

January 31, 2019

Today’s consumers, more than ever, expect brands to understand their specific needs and offer customized products and messaging as a basic standard of service. Across markets in APAC, we’ve seen consumers respond positively to brands that send them personalized ads and recommendations. In a Facebook-commissioned online study with Accenture Global Retail/eCommerce Consumer Journey Study by Accenture (Facebook-commissioned online study of 9,783 people ages 18+). June to July 2018, 86% of consumers surveyed in Indonesia and 94% in India find personalization valuable when making purchases.

This consumer trend, combined with technological development in advertising, presents to marketers exciting opportunities in personalization that help increase relevance and develop deeper connections with consumers. By tailoring products, communications and experiences, companies can boost brand preference among audiences and create greater marketing impact.

The Pitfalls Of (Too Much) Personalization

While personalization clearly benefits marketing efforts, tailoring products, messaging and campaigns for multiple consumer segments often also means experiencing incremental costs. Therefore, it is essential that companies find their personalization sweet spot that works with their brand goals by becoming aware of the trade-offs involved.

Over-personalization is an issue that the industry has yet to fully understand, with very few brands having designed an optimal personalization strategy. As many marketers have learned over time, personalization can lead to suboptimal results and loss of ROI if not done correctly. A recent McKinsey survey of senior marketing leaders found that only 15% of CMOs believe their company is on the right track with personalization. ‘The future of personalization – and how to get ready for it’, McKinsey & Company. June 2019

Based on our industry learnings, we have created a framework to help marketers develop their personalization strategies and achieve optimal ROI for their unique brands.

Identifying Your Brand’s Personalization Needs

A common belief is that personalization means providing completely different offerings to each consumer, but this doesn’t always create the most desirable impact for a brand.

We are currently witnessing brands that have built hugely successful businesses over decades on the back of mass marketing suddenly pivot towards extreme personalization for small niches of consumers, only to see disappointing returns. Industry buzzwords such as “1:1 marketing” are contributing to the assumption that this is the way to go for all brands – which is far from the truth.

In reality, each brand’s personalization need falls on a spectrum that ranges from “same offerings for all” to “tailored offering for each individual” and it is important to locate where they stand before designing a personalization strategy.

How Much Personalization Should Brands Strive For?

The optimal level of personalization for a brand depends on the industry it is operating in and the type of product or service it provides. Here’s an example of a product at each end of the personalization spectrum: A mouthwash brand with the single core benefit of “freshness” and a few flavor variants at best is unlikely to have consumers with vastly different needs they can cater to. A brand like this would fall on the left side of the spectrum, providing a similar offering for large consumer segments. However, a pet food business is more likely to have complex category needs based on factors such as animal species and health conditions, and need to offer multiple distinct benefits for each segment. Similarly, footwear brands have more complex matrices for their offerings depending on factors such as their identified target segment’s lifestyle and gender, and should tailor their offerings to provide more nuanced personalization in sizes, colors, styles, heel height and more.

Brands with products that have multiple core benefits, several “benefit” variants, or a need to serve varying core messages to different segments within their brand’s target audience are likely to benefit from raising their personalization game.

Evaluate The Data You Have

Once you have identified the extent of personalization your brand requires, analyze your existing consumer data and assess what else you need to know to craft your strategy. Leverage all of your existing consumer data – apart from details about demographics, marketers may consider utilizing socioeconomic information, types of devices consumers use to access social media, brand interactions, purchase behaviors and patterns.

Use the data pyramid below to figure out the extent of personalization possible for your brand, based on the level and detail of data you currently own:

Get Started On Your Personalization Efforts With Facebook

Once you have evaluated your business need and data capability, you can then start to develop a personalization strategy.

Facebook’s consumer-centric targeting tools allow for greater precision, which brands can leverage to cater to segments aligning with overall business goals. On top of classifying consumers by their passions or interests, Facebook helps to identify overlaps in existing consumer segments so businesses can focus on serving selected core consumer groups that are sizable and easily identifiable with a distinct identity.

Use all available information to identify, define and activate precise audience segments:

Strike a balance between using wide criteria like location, interest, demographics, and more precise data such as past purchases and location. Determine what’s right for your business by considering your budget, capability and business objective. Working with wide criteria will give you larger target segments and subsequently, higher reach and lower costs, but the quality of your leads may not be good enough given the lack of precise data. Segments built with precise data may generate higher quality leads but are often more expensive and have a smaller reach.

Use insights from Facebook IQ to unlock category insights, media behavior and the very latest stats. Beyond this, marketers can also leverage Audience Insights to aggregate information such as demographics, page likes, location and language, Facebook usage, and past purchase behavior.

Facebook’s powerful Audience Selection Tools lets you reach consumers who are more likely to be interested in your business.

• Use Core audience to reach consumers based on the information shared in their profiles.
• Use Custom audience to reach and retarget the most valuable consumers you already know.
• Use Lookalike audience to reach consumers who look like your best customers.

While planning your segments, do also consider how segments link back to your overall brand growth strategy. For example, if your brand needs to drive higher relevance with urban youth, having them as a separate segment with distinct messaging is likely to benefit the brand. However, purely “passion point” or interest-based segments with no clear business-linked hypothesis behind them can often be counter-productive. We often come across definitions such as “music lovers”, “fashionistas” and “excitement seekers”, and encourage marketers to exercise caution before using them.

Estimate each audience’s size and cost as accurately as possible:

Your audience segments should be mutually exclusive with minimal overlap. Having distinct consumer groups with unique characteristics will make it easier for you to deliver relevant content to each segment. Ensure that the same customer does not receive multiple pieces of content with different messaging from your brand. Benchmark the costs of each precise audience segment against a broad segment to make sure your costs are reasonable. Once you’ve determined your target audience, calculate the estimated cost and reach of your campaign before making decisions to scale up or down.

Design specific creative for each customer segment:

Use relevant creatives based on deep consumer insights to deliver better experiences and forge more meaningful customer relationships. Test your creative to ensure you find the one that is right for your audience.

Our Facebook Marketing Partners offer a wide range of solutions that can help marketers achieve their personalization goals. Leverage their expertise to fine-tune your marketing efforts and make consumer targeting more precise, approach them for assistance and take your campaigns to the next level.

Measure metrics that matter:

Track KPIs (return on investment, return on ad spend, sales, revenue, app installs, conversion rate) to evaluate the impact of your personalization campaign and optimize for future efforts.

We know that consumers are interested in discovering content that matters to them. Personalization has been proven to drive up to a 15% increase in revenue and 10-30% in marketing spend efficiency. ‘The future of personalization – and how to get ready for it’, McKinsey & Company. June 2019 By making personalization a priority, marketers can improve the business impact and efficiency of their brand’s marketing campaign while providing their consumers with more memorable experiences.

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January 31, 2020

Personalization: Opportunities, Pitfalls and How To Get it Right

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oday’s consumers, more than ever, expect brands to understand their specific needs and offer customized products and messaging as a basic standard of service. Across markets in APAC, we’ve seen consumers respond positively to brands that send them personalized ads and recommendations. In a Facebook-commissioned online study with Accenture¹, 86% of consumers surveyed in Indonesia and 94% in India find personalization valuable when making purchases.

This consumer trend, combined with technological development in advertising, presents to marketers exciting opportunities in personalization that help increase relevance and develop deeper connections with consumers. By tailoring products, communications and experiences, companies can boost brand preference among audiences and create greater marketing impact.

The Pitfalls Of (Too Much) Personalization

While personalization clearly benefits marketing efforts, tailoring products, messaging and campaigns for multiple consumer segments often also means experiencing incremental costs. Therefore, it is essential that companies find their personalization sweet spot that works with their brand goals by becoming aware of the trade-offs involved.

Over-personalization is an issue that the industry has yet to fully understand, with very few brands having designed an optimal personalization strategy. As many marketers have learned over time, personalization can lead to suboptimal results and loss of ROI if not done correctly. A recent McKinsey survey of senior marketing leaders found that only 15% of CMOs believe their company is on the right track with personalization.²

Based on our industry learnings, we have created a framework to help marketers develop their personalization strategies and achieve optimal ROI for their unique brands.

Identifying Your Brand’s Personalization Needs

A common belief is that personalization means providing completely different offerings to each consumer, but this doesn’t always create the most desirable impact for a brand.

We are currently witnessing brands that have built hugely successful businesses over decades on the back of mass marketing suddenly pivot towards extreme personalization for small niches of consumers, only to see disappointing returns. Industry buzzwords such as “1:1 marketing” are contributing to the assumption that this is the way to go for all brands – which is far from the truth.

In reality, each brand’s personalization need falls on a spectrum that ranges from “same offerings for all” to “tailored offering for each individual” and it is important to locate where they stand before designing a personalization strategy.

How Much Personalization Should Brands Strive For?

The optimal level of personalization for a brand depends on the industry it is operating in and the type of product or service it provides. Here’s an example of a product at each end of the personalization spectrum: A mouthwash brand with the single core benefit of “freshness” and a few flavor variants at best is unlikely to have consumers with vastly different needs they can cater to. A brand like this would fall on the left side of the spectrum, providing a similar offering for large consumer segments. However, a pet food business is more likely to have complex category needs based on factors such as animal species and health conditions, and need to offer multiple distinct benefits for each segment. Similarly, footwear brands have more complex matrices for their offerings depending on factors such as their identified target segment’s lifestyle and gender, and should tailor their offerings to provide more nuanced personalization in sizes, colors, styles, heel height and more.

Brands with products that have multiple core benefits, several “benefit” variants, or a need to serve varying core messages to different segments within their brand’s target audience are likely to benefit from raising their personalization game.

Evaluate The Data You Have

Once you have identified the extent of personalization your brand requires, analyze your existing consumer data and assess what else you need to know to craft your strategy. Leverage all of your existing consumer data – apart from details about demographics, marketers may consider utilizing socioeconomic information, types of devices consumers use to access social media, brand interactions, purchase behaviors and patterns.

Use the data pyramid below to figure out the extent of personalization possible for your brand, based on the level and detail of data you currently own:

Get Started On Your Personalization Efforts With Facebook

Once you have evaluated your business need and data capability, you can then start to develop a personalization strategy.

Facebook’s consumer-centric targeting tools allow for greater precision, which brands can leverage to cater to segments aligning with overall business goals. On top of classifying consumers by their passions or interests, Facebook helps to identify overlaps in existing consumer segments so businesses can focus on serving selected core consumer groups that are sizable and easily identifiable with a distinct identity.

Use all available information to identify, define and activate precise audience segments:

Strike a balance between using wide criteria like location, interest, demographics, and more precise data such as past purchases and location. Determine what’s right for your business by considering your budget, capability and business objective. Working with wide criteria will give you larger target segments and subsequently, higher reach and lower costs, but the quality of your leads may not be good enough given the lack of precise data. Segments built with precise data may generate higher quality leads but are often more expensive and have a smaller reach.

Use insights from Facebook IQ to unlock category insights, media behavior and the very latest stats. Beyond this, marketers can also leverage Audience Insights to aggregate information such as demographics, page likes, location and language, Facebook usage, and past purchase behavior.

Facebook’s powerful Audience Selection Tools lets you reach consumers who are more likely to be interested in your business.

• Use Core audience to reach consumers based on the information shared in their profiles.
• Use Custom audience to reach and retarget the most valuable consumers you already know.
• Use Lookalike audience to reach consumers who look like your best customers.

While planning your segments, do also consider how segments link back to your overall brand growth strategy. For example, if your brand needs to drive higher relevance with urban youth, having them as a separate segment with distinct messaging is likely to benefit the brand. However, purely “passion point” or interest-based segments with no clear business-linked hypothesis behind them can often be counter-productive. We often come across definitions such as “music lovers”, “fashionistas” and “excitement seekers”, and encourage marketers to exercise caution before using them.

Estimate each audience’s size and cost as accurately as possible:

Your audience segments should be mutually exclusive with minimal overlap. Having distinct consumer groups with unique characteristics will make it easier for you to deliver relevant content to each segment. Ensure that the same customer does not receive multiple pieces of content with different messaging from your brand. Benchmark the costs of each precise audience segment against a broad segment to make sure your costs are reasonable. Once you’ve determined your target audience, calculate the estimated cost and reach of your campaign before making decisions to scale up or down.

Design specific creative for each customer segment:

Use relevant creatives based on deep consumer insights to deliver better experiences and forge more meaningful customer relationships. Test your creative to ensure you find the one that is right for your audience.

Our Facebook Marketing Partners offer a wide range of solutions that can help marketers achieve their personalization goals. Leverage their expertise to fine-tune your marketing efforts and make consumer targeting more precise, approach them for assistance and take your campaigns to the next level.

Measure metrics that matter:

Track KPIs (return on investment, return on ad spend, sales, revenue, app installs, conversion rate) to evaluate the impact of your personalization campaign and optimize for future efforts.

We know that consumers are interested in discovering content that matters to them. Personalization has been proven to drive up to a 15% increase in revenue and 10-30% in marketing spend efficiency.³ By making personalization a priority, marketers can improve the business impact and efficiency of their brand’s marketing campaign while providing their consumers with more memorable experiences.

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