The Problem with Personalization - Uwe Hook

Personalization is all around us. Especially online, where companies retarget people with banner ads, bid on competitor terms or even follow prospects who didn't click on an ad by figuring out a lot about who the possible prospects are. A few years ago, when brands wanted to communicate with C-executives, companies had to run a few hundred thousand banners on a WSJ or Forbes section, read heavily by executives and pay the price of two Ferraris. Then brands tagged the computers of these executives to serve more impressions downstream, for the price of a used Honda Accord.

Suddenly, the audience of Forbes and WSJ was addressable through cheaper means, slashing media costs, aligning offers with the target and making content on high-end sites less valuable.

Personalization lifts response.

Or does it?

Personalization assumes that an offer with high relevance, based on your unique needs, will get your attention, convert you easier to a sale, and keep you as a loyal customer.

It can work. And I've seen it work pretty well. Still, personalization is only one aspect of three major pillars of competition: Perceived value and product. Most husbands love their wives but many of them still chase younger girlfriends. Or boyfriends. Apple couldn't care less about personalization, they make their profit through product design, selling out new computers/phones in a day or so. All of us want a better perceived value (deals) and cool products – personalization can't help to achieve any of these goals.

Personalization is for generic or necessary sales. It's not for market revolutions.

Show me the person who yelled out: "I need to get this minivan." and I'll buy you three drinks. Nobody screams in delight: "I need to buy this DVD player."

Market revolutions have high margins because they all have high perceived value and amazing product design. The personalization happens in the head of the customer. They adjust to the cool new product by suddenly being so much more hip.

Here's a dirty little secret: Advertising makes tons of money off waste.

The average American watches 5 hours of TV each day. Let's say 30 minutes of that time is advertising. If all of us would suddenly get only personalized ads, the advertising time would be cut down to 10 minutes or the average American would see the same commercials over and over again. Making advertising less valuable and profitable. The advertising industry thrives on waste. True targeting on TV would erase billions of dollars. Just like it did in the digital marketing world. Ask Forbes.

The real problem with personalization.

Human beings are not unique data sets. While I love the personalization of Amazon and Netflix, it also frustrates me to no end because I chose products for others. My kid's birthday is only once a year and I don't need to see the newest Lego set as a recommendation each and every day. I wish personalization offers would come bundled with a modality dial: Today I'm shopping as me. Tomorrow I'm shopping as a dad. In 2 weeks I'm shopping as a husband. That's easy. It's harder when it comes to my personal preferences: 2 days ago I was a Kings fan. Yesterday I was interested in technology. Tonight I am a German soccer fan. I have no clue who I'm going to be tomorrow, what I will be interested in, what might peak my interest.

We are human beings: Non-linear, all over the place, integrating a multitude of interests.

We'll keep trying. Still, it remains a Sisyphean task. Advertising was always "Spray and Pray". We used to have 100 bullets to spray. Now we have 103 bullets.

We have to do better.

Uwe Hook is the CEO and Co-Founder of BatesHook, Inc. (www.bateshook.com) and a veteran of the advertising and marketing industry with the goal of building connections between people and brands. Uwe can be reached at uwe@bateshook.com.

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