E-Commerce

Personalized advertising: What you need to consider as a retailer

Fatih-Kağan Taşkoparan

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You probably know it all too well: you are interested in a random item and read product descriptions about it in one or two online stores. Then you check the news of the day on a news portal or visit Facebook - and poof, these websites display advertising banners for the very item you were looking at in the online store.

Personalized advertising is a double-edged sword. Some like to be guided and inspired by it, others feel spied on. For you as an online retailer, however, one-to-one marketing has a compelling relevance: It is now one of the most important cornerstones of any online marketing for stores. You can find out how personalized advertising works and what you need to consider from a legal perspective if you want to make use of it here.

What is one-to-one marketing and how does it work?

Around 90 percent of television viewers switch channels as soon as a web block begins in the current program. Why is that? Clearly because the majority of commercials and their presentation have nothing to do with viewers' interests. On TV, commercials cannot be tailored precisely to all viewers, so the dispersion of this classic marketing measure is correspondingly high.

On the internet, however, things are very different. Thanks to ubiquitous tracking tools, users' activities, clicks and interests are observed, collected and analyzed in detail. This personalized marketing works on the basis of artificial intelligence:

  • Analysis tools collect information about how users behave on the internet: which devices they use to surf, which pages they visit and when, how long they view certain content and so on.
  • It doesn't matter whether the search is carried out directly in your store, for example, or in a search engine, on social media or in a third-party store.
  • The technical basis for this are cookies, but also systems that recognize which devices and browsers users use to navigate online.

The analytics networks compare the collected information with their cooperation partners. These can be online stores or product manufacturers, for example. If the search behavior of users matches the product portfolios of partners in the advertising network, users are shown exactly these or similar products when they continue browsing (even on completely different websites).

Individualized advertising can be integrated into your store in two ways:

  • Personalized marketing:

Specially programmed tools analyze and evaluate the purchasing and search behavior of customers. Based on this data analysis, targeted one-to-one marketing is carried out that is actually geared towards the individual interests of specific people.

  • Customization marketing:

Customizable products do not require data collection, as consumers configure and personalize them directly according to their own wishes during the purchasing process. A typical example is PCs, where prospective customers can put together the components themselves before purchasing. This one-to-one marketing is therefore based on the ability of consumers to make individual decisions and thus receive a product that is a perfect fit.

Advantages of one-to-one marketing in e-commerce for you and your customers

You sell a specific product and consumers are interested in precisely this product. However, their purchase decisions have not yet been finalized, they have only done research. The next time they visit social networks, they come across advertisements for the product - this reminds them of their previous research and they think about buying again. In this way, personalized advertising brings the desired product back to mind and thus increases the chances that you can turn prospects into leads and ultimately buyers.

For customers, on the other hand, the advantage is that they no longer perceive the advertisements displayed as annoying, but as stimulating and purposeful. People are statistically much less likely to perceive interesting ads that cater to their own tastes as a disruptive factor. One-to-one marketing can reinforce customers' intention to buy and make sales in your store more likely, especially when they are undecided.

You can also use your data pools for email marketing and send customers congratulatory emails with discount codes on their birthdays, for example. Many people appreciate this kind of attention, so they are more willing to be invited to make a discounted purchase in your store.

Why personalized marketing can also meet with rejection

Data protection regulations are much stricter in Europe than in other parts of the world. In addition, awareness of the protection of sensitive personal data is more pronounced in Europe than in the USA, for example, where internet users are much more positive about personalized advertising.

People who take their data protection very seriously may feel harassed by one-to-one marketing measures in this country and react with even greater reluctance instead of buying interest. After all, some people may feel that they are being spied on if Facebook, Google and Amazon are immediately informed as a result of a quick winter tire search and pictures of tires suddenly appear everywhere. In the worst case scenario, such people will avoid your store from then on.

By no means all customers therefore give their consent to marketing cookies in online stores or other websites. However, your personalized marketing can only be effective if website visitors manually consent to the use of tracking cookies.

Another risk for you is incorrect analysis or the inappropriate display of advertisements. If your marketing tool shows users completely unsuitable or even unpopular products, this will inevitably lead to irritation and sometimes to deliberate rejection of the brand or even your store.

Individualized advertising and the legal aspects

Whenever you want to use the personal data of third parties for your own purposes, you must pay close attention to the legal framework. In Europe, consumer data protection is comprehensively regulated in the General Data Protection Regulation (GDPR). It stipulates that users can actively deactivate advertising on websites; cookies as a tracking method are only permitted if manual consent has been given beforehand.

In practice, this means that your customers must voluntarily consent to the use of cookies and other tracking methods when they browse your website. Only then is it possible for you to use personalized advertising.

Where and how can advertising be personalized?

The options for placing personalized advertising are diverse, the following options are used most frequently:

  • Social media platforms such as Facebook, Instagram, TikTok and Co.
  • Your own webshop
  • Partner sites that display your advertising
  • the website of your company

As a retailer, you should pay particular attention to social media. Billions of people use Facebook, Instagram, etc. The chance of reaching your customers with personalized advertising is greater here than anywhere else on the web. Thanks to users' open communication options, you can also receive feedback on your products. You can also specifically ask others to write a review as a comment. If a product is actively discussed, you can reach more people and potential buyers.

Conclusion

In e-commerce, intelligent marketing is more decisive than ever for success or failure. At the same time, budgets are often low, especially for newcomers. One-to-one marketing offers you the chance to avoid wastage and address your target group in a targeted manner.

Careful analysis tools and the constant adaptation of your measures to the requirements of the GDPR are of the utmost importance. The extent to which the advantages and disadvantages of personalized advertising have an impact depends not least on your target group, the products you sell and the channels on which you place yourself.

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