Making it personal
What behavioral science can tell us about personalized content
We as humans have a deep-seated need to feel unique and special. We want to be acknowledged in positive ways and accepted by peers, and we also want to feel extraordinary. We are the center of our own world and we adore owning little trinkets that have a personalized stamp on them: a keychain with our initial, a bottle of Coke with our name printed on it, or even a piece of jewelry that’s been engraved.
Our desire to be noticed and remembered is not simply a trait we possess because we are shallow and crave attention. Rather, it is rooted in social psychology principles such as the false-uniqueness effect. This is a type of cognitive bias in which people are inclined to think that their own qualities and attributes are unique and desirable, even when they are not.
Social psychology has the potential to change the future of advertising. As our world evolves and becomes more technologically advanced, companies are facing new challenges when it comes to advertising and communication. With many streaming devices, satellite radio channels, and apps becoming commercial free, or using limited commercials, it’s more important than ever that consumers find advertising messages to be relevant and interesting.
The Personalized Experience
Have you ever been watching Hulu and had a screen pop up and ask you, “Which ad experience would you prefer?” How about ads popping up for great vacation deals after you google the weather in Barbados?
The attempt to personalize ads is nothing new; however, it is becoming more omnipresent as companies fight for consumers’ precious attention. The question is, why does personalization work?
The cocktail party effect is your brain’s ability to focus on one particular stimulus while filtering out all the other commotion. So, say you are at a party and everyone around you is simultaneously talking and having a good time. You can tune out all of that background noise, if you choose. However, as soon as someone says your name or brings up a topic of interest, your brain deems that important, makes you notice it, and you are able to tune in. Hearing our own name is of particular interest, to the point that it creates a unique activation in brain function.
What this effect indicates then is that consumers would be more responsive to advertisements that are personalized and tailored to fit their interests. Let’s imagine you are at home after a strenuous day. You’re making dinner, clothes are in the wash, kids running around, and the television is on in the background. Let’s be real, you probably aren’t paying a whole lot of attention to the TV. There is a lot of noise and distraction surrounding you. However, as you are chopping the veggies for the stir-fry, you immediately recognize the song playing in a commercial. The next thing you know, the steak knife is down, and your craning your neck to sneak a peek at the Television. The song elicited feelings of nostalgia which were meaningful to you, and therefore, the ad caught your attention. This is a real life example of how a personalized ad can resonate more powerfully due to the cocktail party effect.
Case Study: Volvo
First, let’s look at a successful use of personalized advertising by Volvo. Volvo uses what is known as Addressable TV, which refers to using data to triangulate a specific audience to target for advertising. In a Forbes article Kevin Corcoran, marketing communications manager at Volvo, had this to say regarding personalized ads:
“Addressable TV as another consumer touch-point continues to drive strong sales assistance impact, and incremental sales, which in effect delivers a solid return on ad spend (ROAS). We’ve seen solid ROAS for the dollars invested within Addressable TV. In addition, we’re also able to see target segment performance and adjust, managing toward optimal frequency to impact sales, and see what models our consumers purchased.”
Volvo is specifically targeting who it chooses to advertise to. The company is using privacy compliant data to target consumers who are most likely to respond to their ads. For example, Volvo can choose to specifically target audiences they know are in the market to buy a brand new SUV. Rather than advertising to everyone, Volvo is taking a shortcut to pitch their product exclusively to those that the data suggest are potential buyers. This allows the company to focus their ad spend on a group of consumers it already knows will be more receptive to their product and, therefore, their communication messages.
Case Study: Facebook
Now let’s take a look at a less successful attempt to personalize ads, by Facebook. Back in 2007 the company launched ‘Beacon’ a new advertising feature which automatically enrolled users without asking their permission. While the point was to make ads more personalized and connect people through shared purchasing interests, it failed miserably.
The technology tracked users’ purchases across different sites and delivered ads based on their search history. What consumers took most issue with was the sharing of their personal purchase history with friends and family without their explicit permission. Most people were horrified by the idea that their “private” purchases on other websites would be posted to their news feed without their knowledge.
The implementation of this feature generated fierce backlash and anger, as many consumers felt that their privacy had been invaded. Facebook swiftly changed course and now requires opt-in from users. Even though CEO Mark Zuckerberg apologized profusely, the trust was broken between the company and consumers — a difficult bond to repair.
Personalization vs. Privacy
Examining these two case studies, both companies are utilizing data that is within their legal right to use, without infringing upon our privacy. However, the two companies had widely differing reactions from the target audience. While we as consumers may respond to ads that are personally targeted to us, no one wants to feel that their privacy is violated. What we can take away from this might boil down to control — or at least the perception of it.
In the Facebook example, we see a complete lack of control on the consumers’ part as posts are being made on their behalf without consent. Hyper-customized ads are barely noticeable when you’re busy having your privacy violated. Contrast that with the Volvo example. The data Volvo collects is geographic, demographic, psychographic, and most critically, private. Your information isn’t on display for others to see, but rather used as a tool for their marketing teams. The consumer still has control over the situation — they can choose to click on the ad or not.
Anything else?
There’s one other nugget of information I’d like to add into the equation to help explain why personalized ads may resonate more soundly with consumers. In social psychology there is a concept called the mere exposure effect. This effect tells us that people are more likely to find themselves developing a preference for something just because of repeated exposure to it. The more someone sees something, the more they like it. Let’s revisit Volvo. They perform research using privacy compliant methods to target consumers interested in purchasing SUVs. They are employing the cocktail party effect to attract consumers eyes with ads for products they’re already familiar with — knowing this will cause them to tune in. After that, they work to ensure that their ad pops up over and over, capitalizing on the positive habituation of the mere exposure effect. In other words, they show you something that they know your brain will respond to and then show it to you so much that you end up loving it without even realizing what’s going on. Pretty slick.
Wrap it up!
All in all, I think there is great potential for companies to dip their hands into the addressable ad market but it needs to be done tactfully and with respect for privacy, or marketers may end up biting the hand that feeds them (data) — consumers. When personalized ads are well-received they can promote products more successfully than traditional television ads ever could. As the shift from cable to streaming continues, we may see an increased demand for web-based personalization, and companies should be prepared to tackle that challenge in a thoughtful way.
Danielle Pascuzzo is an intern at Olson Zaltman
