Why ARF thinks marketers should reconsider their personalization strategy

At a time when technology is enabling marketers to inch ever closer to one-to-one marketing, one of the industry’s most highly respected institutions suggests that this “Holy Grail” may not be all it’s cracked up to be. The Advertising Research Foundation (ARF) warns marketers that excessive targeting and retargeting can lead to lower-than-expected ROIs, a poor customer experience and potential damage to a brand’s reputation.

“The perspective of the ARF is that there’s always been targeting and you have to have it,” said Scott McDonald, CEO and president of the ARF. “But when you move farther out on the spectrum toward one-to-one marketing, you’re getting into a more problematic area where you have to ask yourself both about the trade-offs of the higher cost and the return on that cost.”

ARF is an independent science-based non-profit organization that acts as a neutral research body for questions on measurement and efficacy in advertising.

Personalization can work … for some targets

Some marketers do benefit from personalized, people-based marketing, admits McDonald. “If it’s a highly niche product, then you’ll need to pay more attention to targeting.”

And search marketing works, “because people are actively looking for something and they’re expressing interest in it in the moment.”

“But re-targeting, where you follow people around for weeks, is much more questionable,” McDonald said. “When marketers move into those modes of targeting, it has the potential of giving all the rest of the targeting a bad name because there’s a possibility of consumer backlash.”

Consider the risks vs the benefits

McDonald bemoaned the errors that can be found in third-party data, as well as the negative brand experience customers can have when bombarded with excessive targeting and re-targeting ads.

“There’s an economic issue as well because you’re going to pay more for a more specific target,” McDonald said. “And you may not be building a brand because you’re really only targeting too narrow of the group.”

McDonald also mentioned the “creep” factor, when users start to feel spied on by messages that follow them everywhere they go online.

“I think it’s conceivable that, that we’ve taken targeting too far in terms of effectiveness and ethics,” McDonald said. “And I think it’s a reasonable question to debate.”

Can we put the personalization genie back in the bottle?

Advertisers should definitely consider moving away from personalization and consider putting those dollars toward more traditional advertising, McDonald said. And for a wide variety of reasons, some brands are doing just that. Likely motivated by its frustration with digital advertising in general, CPG giant P&G upped its investment in AM/FM radio in 2018 — a move that spearheaded similar action from other brands.

“It’s been decades since [P&G] was advertising on AM/FM radio and they’ve got good results from it,” McDonald said. “If it’s not person-based and if you’re not getting into third-party databases, you’re not getting into all of this GDPR-compliance stuff. So yeah, I think there’s a good argument for re-evaluating and seeing whether people have been too quick to abandon tried-and-true marketing channels from the past.”

Why you should care

A rise in the use of customer data platforms (CDPs), which are used to identify customers across platforms and devices is just one proof point of how invested marketers are in data-based, personalized marketing. But personalization comes with its costs. Not only does it raise efficacy and ethical questions as ARF has articulated, but it is causing a content crisis as marketers struggle to keep up with the demand of producing ads that are tailored to each micro-target.

“Advertisers have to research what the impact is for the long term for their brand,” said Paul Donato, chief research officer of the ARF, adding that it’s hard to tell a brand’s story within the confines of a typical targeted digital ad.

“It’s very important that advertisers understand the tradeoffs between what they’re getting in a short promotional ad on a digital platform versus what they could do with more traditional media, like a :15 ad on radio or television. They need to understand what the sales return is for the digital ads, but then also balance that out with what the long-term impact on their brand is,” Donato said.