The high valuations of companies such as Facebook, Groupon, and Invite Media could point to a new tech bubble. Or they could be seen as the tools that will finally deliver mass-market messages, personalised for each individual.
It's easy to question whether Invite Media, a company that helps advertisers and agencies buy media in real-time marketplaces was worth the $70m paid by Google or whether Admeld, another Google acquisition that helps publishers sell into such marketplaces, will justify the reported $400m price tag. Is there reason to this rhyme? Yes! Welcome to the age of mass individualization.
Dotcom 2.0 skeptics still wonder whether Facebook is worth its latest $100bn valuation. And whether those that operate in the Facebook ecosystem, such as Buddy Media, recently valued at $150m, will also prove their value.
However, those who believe these price tags could be justified insist upon the common idea behind all these highly valued companies. What all these businesses promise is one-to-one marketing at scale.
True, it was promised – but not delivered – in the 1990s. This time it seems that marketers' dreams of technology that allow them to greet each consumer with a customized offer and message, aligned with their needs and interests, could be reality.
Customer Relationship Management and the Internet have given us the tools to segment users and send targeted messages – but those segments are still very large. Very often customization hasn't gone much further than being addressed by the correct name.
The technology was simply not able to generate enough understanding about each consumer to build micro-segments and approach each consumer with a customized offer.
In 2011, however, we seem to have reached critical mass. As consumers spend more and more time online, they allow marketers to learn more about their interests via anonymous profiles, facilitated by advances in technology and algorithmic modelling. Facebook has sparked a sense of consumer freedom with people telling the world more about their interests than most marketers would ever dream they'd use. Similarly research companies are finding more and more data in the digital space.
This allows media planning to be replaced by audience planning, where the message seen is determined by the profile of the person watching, not the channel or content they are viewing.
Technology determines the most relevant campaign for that user and dynamic creative, which assembles messages from dozens of components, delivers a personalized ad that has millions of potential iterations.
Across Europe, Dell is already using such dynamic creative to change 10s of different elements in its online ads to ensure that the offer relates to a consumer's previous browsing history at the Dell site, driving massively improved performance.
Part of the basis of the valuations being put on platforms such as Groupon or Facebook Places is due to their ability to customize location-based offers.
The idea of individualization is not new. A good salesman could always pitch the right product for each customer by selecting the most relevant sales offer. Technologies such as call-centers or configurators on websites allow brands to build mass-offers for large groups.
What the new platforms and technologies are finally delivering is mass-individualization. This allows us to reach millions of people at low cost of mass media while also giving them the customized message of the good salesman. The effect is to drive up ROI by more than 100% in many cases and potentially decrease the costs of marketing.
The million or billion dollar price tags being cited are a demonstration of the belief that investors have in these technologies and the companies that build them.
The good news for marketers is that they can access such technology through agencies like MediaCom at low cost. In fact the only investment they need to make is to put in the time and effort to understand the opportunity, to test and learn and to utilize technologies of mass-individualization.
Not only will they benefit but so too will their consumers. The massive increase in uptake from messaging that exploits all the potential of mass individualization shows how highly consumers also value these kind of relevant and targeted offers.
Oliver Gertz is Managing Director of MediaCom Interaction EMEA. He can be reached at firstname.lastname@example.org
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