Personalization is Transforming as Privacy Forces a Consumer Data Drought

Facebook announced that it is creating new avenues for “personalization” as targeted advertising becomes more difficult due to privacy changes and data collection restrictions. Facebook’s adaptations include reducing friction in user-to-business messaging and adding sales optimization tech capacities such as lead tracking.

Beyond Facebook, the announcement points to what could be a much broader shift in digital marketing. The disappearance of third-party cookies and mobile IDs — and the granular customer data they supply — is forcing businesses to rethink how to ‘personalize’ marketing strategies. Facebook’s strategy suggests the future of personalization in marketing could hinge more on customer experience and less on ads.

Now is a good time to reassess what personalization means and where it is headed.

Personalization has always been an awkward turn of phrase

Personalization, in official marketing speak, means tailoring business communications and experiences to an individual customer, or person. Personalized ads show a customer marketing materials based on their location, age, gender, or interests. A personalized customer experience might tailor product recommendations, onboarding materials, or a returns policy to the individual.

But “personalization” has a dark side with which all marketers are familiar. The term can simply be a euphemism for data collection and ad targeting practices, often conducted without consent or transparency, that are less about improving the experience for a “person” and more about milking that person’s information for all it is worth.

Personalization can be bad not only because it’s obscure or non-consensual but also because it drives a poor or creepy customer experience — when it is masquerading as doing just the opposite. The practice, despite the uncritical way some marketers talk about it, is not always positive from a policy or business perspective, as anyone chased around the internet by an ad for a product they already bought can attest.

Personalization in ad targeting is evolving

Personalization in ad targeting will not look the same in a few years as it has over the past decade of digital marketing.

The first major change is that personalization is going to have to become more consensual. Privacy regulations such as GDPR and CCPA, coupled with anti-tracking moves by gatekeepers Google and Apple, are forcing businesses that want to collect consumer data and target ads on the basis of that data to get consumer consent before doing so. On the one hand, that’s a good thing for personalization, as it means the people receiving personalized ads will have signaled they actually want those branded messages. On the other hand, the impending lack of data will make achieving personalization more difficult, and small players will suffer more than incumbents.

The upshot is that personalized ad targeting will both diminish and evolve. It will diminish in that many brands, lacking the data required to personalize ads, will turn to alternative ad targeting strategies. That could mean relying more heavily on contextual intelligence (perhaps in concert with behavioral targeting). It could also mean shifting spend from individualized behavioral targeting to one-to-few or one-to-many channels such as CTV and DOOH.

But personalization will also evolve as advertisers turn to new technologies. One such technology will involve more targeted and richer ad units in walled gardens. Unable to track an Instagram user once they leave the social app and move to other apps, advertisers will instead leverage the behavioral data in the app to retarget prospective customers while trying to close the deal in the ad unit, a testament to the growing normalcy of social commerce. Another technology, edge computing, will see marketers act on consumer information without the data leaving the targeted device, diminishing privacy and security concerns.

Personalization is here to stay, in other words, but expect it to get harder, more dependent on the walled gardens, and to be deployed less as the default chief ad targeting strategy and more as a complement to other targeting methods.

Is CX the new frontier of personalization?

Facebook’s announcement should make us wonder whether customer experience is the new frontier of personalization. Faced with the greater difficulty of personalizing ads to future users, businesses will double down on tailoring the customer experience to existing users in hopes of driving recurring revenue and boosting reputation via word of mouth.

What is more effective at building lifetime value in customer relationships, anyway? Is it the retargeted Facebook ad or the tailored product recommendations and frictionless checkout experiences that brands we’ve already patronized deploy to personalize the post-first purchase customer experience? Critics of the privacy movement’s effects on marketing often note that most brands will not have enough first-party data to create lookalike audiences and pursue new customers effectively, and they are right. But what all brands should be able to do is leverage CX technology to make doing business with them better for the customers they already have.

For digital ad juggernauts like Facebook, which have gotten huge by equipping advertisers with personalized ads, it appears personalization in the new privacy-conscious Web will entail new ways of connecting brands with customers. Perhaps, going forward, personalization on the world’s largest social network, as the company itself signaled, is less about a potentially creepy ad and more about business-to-user messaging capabilities, reduced friction, and customer-centric return policies.

Maybe that’s a path to a better internet in which consumer data more equitably and consensually benefits both consumer and brand.

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Joe Zappa is the Managing Editor of Street Fight. He has spearheaded the newsroom's editorial operations since 2018 and compiled the daily newsletter since 2016. Joe is a journalist who has written widely about technology, business, and politics. You can contact him at jzappa@streetfightmag.com.