What is the current state of personalisation?

“The more one knows, the more one comprehends, the more one realizes that everything turns in a circle.” Johann Wolfgang von Goethe, German poet

It absolutely feels to me as though personalisation seems stuck on a spin cycle.

Why is it that when you ask a bunch of marketing professionals “Who does personalisation well?” they all struggle to answer? That's what I found when conducting extensive research over 150 interviews: puzzled looks. Why is it that when you ask the same people to define personalisation, it is met with hesitation and uncertainty? Why is it that when you try and find examples on the topic, it’s filled with nothing but positive case studies of false positives and self-serving revenue uplifts? Or when you try to look for literature available on the topic, you’re only met with Houlind's Hello $FirstName, who beat me to my book, as the only notable mentions in the realm of personalisation?

Thankfully, it’s all part of the plan. It will just take some time.

In 1962, EM Rogers created a model that better understood this adoption of technology than just the hype. He originally reviewed the demographic and psychological profiles of farmers in the late 1950s and created a bell-curve graph that describes five distinct groups. These groups within the model demonstrate the milestones involved in adopting an innovation: the innovators, the early adopters, the early majority, the late majority, and the laggards. Its simplification has mostly stood the test of time, even though it has been criticised and adapted slightly since then. What model hasn’t??

Rogers model was further adopted in Malcolm Gladwell's The Tipping Point (2000) and again in Geoffrey Moore’s Crossing the Chasm (2002) who believed that there was an abyss between the early adopters of the product and the early majority, i.e., the pragmatists. At which point, Gladwell suggested there was a "Moment of critical mass, the threshold, the boiling point”.

That’s where it feels as though we are—the tipping point.

The Tipping Point

I think the question is less about where we are, and more about what is it going to take to tip it over?

It needs a catalyst. One that provides a genuine need. Like Christ, Personalisation’s Second Coming is long overdue, and its earlier failures will help ensure its boom-time sticks. Of course, in order for that to happen, brands must pivot towards an attitude of “We need to do this” rather than remain stuck in the current status quo of “We can do this (if we can be bothered)”?

The pandemic absolutely helped. According to the latest Personalisation Maturity Report by Dynamic Yield, the industry has moved from “Basic” to “Advanced” for the first time, a result, they say, of increased adoption amid COVID-19’s digital awakening. How much this has influenced personalisation to revert back to its true purpose, I’m unsure. Either way, personalisation requires a genuine, widespread purpose or reason to rehabilitate it into what it should always have been: being personable.?

I think whilst the pandemic helped, there are three reasons why I see brands tipping over into the personalisation world based on a genuine need, rather than a vanity tactical add-on project. Three things that might just be the one thing we personalisation pals need to poke people out of prostration. I adore alliterations.

1. Increasing acquisition costs

Costs to acquire customers are increasing. It costs more now to acquire a customer than ever before.

We know from studies that personalisation reduces acquisition costs by 50% and thus improves marketing efficiency by 30% . Personalisation seems like the answer to this growing epidemic. Better targeting leads to more relevance. More relevance leads to better resonance. Better resonance ends up as resilience.

Over the years, the cost of advertising with Google Ads has grown more expensive. In the past year alone, the cost per lead for Google Ads has gone up in 91% of sectors, with an average total increase of 19%. While this is comparable to 2019's increase of 21%, it is substantially greater than the 5% rise and 4% drop that occurred in 2021 and 2020, respectively.

Google, the master of revenue growth, knows the drill: there are only two ways to grow those numbers. First, get more people to click on more ads, sure. The second option is simple: increase the cost of advertising. After all, why settle for small change when you can milk those ad dollars for all they're worth?

2. Data Privacy Regulations

Where the pandemic has created a singular shift in brands and investor expectations, there is another move to discuss that may impact the wholesale adoption of personalisation – the regulation of data privacy.

As third-party cookies are being phased out in 2024, advertisers and platforms are facing increased regulation that impacts them in two significant ways: cost and effort. In short, they're being forced to change.

Meta, for example, has been hit by Apple's App Tracking Transparency Regulation, which has reduced targeting capabilities by limiting access to iPhone user identifiers. In 2022, Meta acknowledged that this feature would result in a decrease in sales for the year to the tune of about $10 billion . As a result, their cost per acquisition (CPA) has climbed by a staggering 43 percent compared to just 2021, a clear passing of costs onto the customer.

3. Don't make me mention AI again

History has shown that with every regulation that raises the bar, there's often a technological innovation that makes it easier. Enter AI, the game-changer that could streamline the personalisation process and help brands stay ahead of the competition. So, say Hi to AI and wave goodbye to the fear of increased effort. The future of personalisation might just be smoother than we think.

Personalisation vendors Intellimize, Mutiny, and others are exploring this avenue. The former is on the Inc 5000 and raised $52 million and the latter has raised $72 million on a $600 million valuation. You heard that right. Brands are catching up, too, such as a true pioneer of personalisation within the last ten years, StitchFix, which is making fashion recommendations using part-AI and part-human. They claim: “The algorithms provide the science; the stylists provide the art”. We won't mention their plummet in market cap as it goes against my argument.

Spin cycle

This type of cyclical adoption curve is all too common. That's why there's a model for it.

Ben Labay, Managing Director, Speero believes: “We’ll continue to go through these cycles where there will be a lot of abandonment of personalisation techniques and technology until the new cycle starts.”

It all feels similar to the infamous QR code adoption of "wow this is cool" to "this feels a bit gimmicky" to "we can't touch each other, all praise QR codes". It feels like that new cycle needs a catalyst of some sort. The pandemic was it.

Personalisation will continue to go through these cycles, and it is only a matter of time before it makes a better second impression. Or third. Or fifth. Or twentieth. I side with Greg Anderson whom I spoke to as part of my book, who said “Email marketing and social marketing have gotten to personalisation already. What is it going to take for websites to get there? The answer is time.”

In my opinion, personalisation is on the cusp of emerging from a passive state, and it's just a matter of time.

My book "The Personalization Paradox" is due out late July. To receive a discount code off the already paltry price because it's not going to by a NY Times best seller but instead a self-depricating look at life, greed, ego, capatalism and, oh yer, personalisation - sign up for the newsletter here