Getting up Close and Personal-ization

Consumer facing brands are no longer waiting for their consumers to tell them what they want to buy. The past couple of years have seen a paradigm shift in how brands are creating more personalized experiences by integrating advanced digital technologies and proprietary data for their shoppers. These brands are working with business models that involve using software to match humans with things they might want to consume. This could be music, news, handbags, wine, other humans and lots more.

What’s exciting is that recent data suggests that global venture funding for personalization and recommendation platforms has surged massively in recent quarters. Investors are spurting billions into the space, creating a batch of freshly born unicorns relying on algorithms to customize music streams, news feeds and so much more. Some of the recent deals include Chinese news aggregator ByteDance’s massive $2 billion funding, valuing it at around $20 billion. Some of the other major deals include Germany’s personalized shopping engine ‘About You’ with $300 million, restaurant recommendation app Zomato’s $200 million, and music streaming platform Deezer’s $185 million. Moreover, there have also been some high-riding exits, including Spotify’s smash IPO, along with China-based news aggregator Qutoutiao, which is poised to go public at a multi-billion-dollar valuation.

Understandably, digital natives such as Amazon and Netflix have a clear head start here, with their business models built around customer needs and personalization. Netflix, now valued at around $160 billion, has been collecting data and using it to engage with customers about their viewing preferences even before getting into the streaming business. And shopping sites such as Amazon and Alibaba have been serving up algorithm-driven suggestions of what to buy for almost two decades now. But traditional banks are catching up, with Starbucks launching personalized games to lead their loyalty reward programs, and Walt Disney’s using personal interactions to serve up targeted offers to guests. But personalized marketing is only a step in the direction of brand individualization, and incumbents have significant work to do. Fortunately for them, they do have some significant strategic advantages over many digital players: they can merge digital and physical channels to deliver an integrated personalized experience, as Starbucks, Disney, and others are doing. This can also be a reason digital unicorns such as Amazon are opening brick and mortar stores to establish their presence in the physical world.

Phronesis Partners Gist

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We partner with clients to ‘simplify growth’ by leveraging our research and intelligence capabilities. Write to us at: info@phronesis-partners.com

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