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Setting the Record Straight on the Personalization Paradox

  • Andrea Reichenbach
  • 4 min read

As we wait with bated breath for the end of third-party cookies, many are also calling it the end of addressable advertising. These conclusions aren’t derived from technical limitations, but rather the notion that advertisers should abandon ad targeting and personalization altogether. While pundits posit on how the industry should and shouldn’t be moving forward, they’re missing the real point. This major pivot in the industry gives us an opportunity to have a conversation and focus on the real matter at hand: the control and availability of data.

Our attention is misplaced, and it’s costing us

So why is this the wrong debate? The simple answer is because addressability works for all three sides of the triangle: the advertiser, the publisher, and the consumer. It allows the former to reach the right people and engage them more effectively. It offers the middle the ability to maintain and grow revenue that supports the development of free content. For the latter, personalization means more relevant offers, yes, but what we should really be debating is how this technology should evolve to ultimately offer people more control over how their data is used, how often they can be advertised to, and where and when.

If an enterprise has the ability to know who they are talking to, it means they can listen, react to, and offer people clear and persistent choices. Not many in the industry are focused on what it will take to eventually get to a place where individuals can dial personalization up or down at every point of the customer journey, in real time. This customer-first approach is based on an acute understanding of unique preferences, expectations, and what the customer decides is valuable and convenient. If advertisers walk away now, we are facing real risks that this future does not materialize, and the consequences are much more profound than deciding whether to optimize your media mix with contextual ads.

The strength of diversity drives more value for all

Lest we forget, Facebook, Google, and Amazon have already shown us one version of the future of data-driven advertising. The dominance of these digital ad giants is foundationally based on the scale of the direct individual relationships they have with everyone who logs on to use their platforms and services, and the services of many other companies through the extension of single sign-on. The improvement in performance is unquestionable. As a result, in its recently published, U.S. Digital Ad Spending Update Q2 2020, eMarketer estimates that these three companies alone netted 62% of all U.S. ad spend in 2019, with “other” hovering at about 38% respectively. Every publisher, social media platform, and ad network in the U.S., other than Facebook, Google, or Amazon, only earns slightly more than one out of every three dollars spent on digital media today.

Economic implications aside, this lopsided situation reveals the immense vulnerability and inequality of our unbalanced ecosystem and the dangers of concentrated power. Without a more neutral, democratic power structure created by more equitable access to data, and the ability to build direct consumer relationships, decisions are invariably made by the few for the many. Consider the fantastically vigorous speculation on what will emerge from Google’s Privacy Sandbox, and imagine if, instead of waiting and watching, advertisers spent their energy looking for solutions that made them less dependent on the outcome. Imagine if publishers, platforms, and brands accustomed to high-performing media diversified their dollars by testing other addressable, omnichannel opportunities across the open internet instead.

The increased competition for ad spend would have another benefit—accelerated innovation and enhanced consumer choice. If an incentivized platform or publisher developed ways to offer users more transparency and control over data and was committed to respecting people’s preferences, others would follow, but until the money flow begins to create alternative tributaries, this upside cannot be realized.

Learning from our failures is critical

I will agree with the pundits on one thing. While the benefits of personalization in marketing are long-established, that’s not to say that it doesn’t occasionally go wrong, resulting in sometimes cringe-worthy and, frankly, maddening stories. The fallout from using invisible tracking and data in unlawful or questionable ways can take years for a brand to recover from, if ever, all because someone made the decision to prioritize the business benefit over the value provided to the consumer.

Fortunately, coverage of these negative events led to a broader awareness of data collection and use and the need for more ethical data practices, better legislation, and putting people first. Not only has this resulted in the end of third-party cookies, but in the wake of GDPR and CCPA, it’s created momentum for broad digital education and stronger and clearer data privacy legislation, perhaps even soon on the federal level.

Finally, by now we should all have learned to stop making predictions. We cannot anticipate emerging new technologies or applications that will create transformational value for our industry and our societies. Nor should we be arrogant enough to predict what others, even our future selves, will want. As long as our North Star remains focused on giving individuals more power to control and communicate their choices in our data-driven world, the rest will follow.

 

This article was originally published in Advertising Week 360