Data is Free

Naj Kidwai, CEO of Real Time Content, has a great article at AdAge describing how media companies and ad agencies need to embrace personalization as the next wave of advertising.

One of the key grafs, I think, is the notion that technology enables targeting to take place on the individual level.

The concept of personalizing online video shifts the paradigm from contacting the mass market to targeting on an individual level. Audience fragmentation is creating a fundamental need for marketers to make video advertising more relevant, addressable and personalized.

The reason that personalization matters isn't some abstract notion of "target every ad." The reason is matters is that word-of-mouth remains THE critical decision point for buying goods and services. One of the reasons that Japanese cars were able to conquer the US car makers wasn't because of their ads. It was because they consistently made high quality cars AND the purchasers of those cars told their friends.

On the local level our contractor gets all of his business through referrals. My other example of word-of-mouth is that a friend of mine read my post on Mexican Coke and went to Ro Ro Bar-B-Que to buy some of that cane sugar goodness. Note that the word-of-mouth function in the last example happened entirely online. A friend read the ad.

This is where personalization gets interesting. Media companies and agencies already have all of the data they need to deliver incredibly personalized ads. Their existing data could then be augmented by data from Twitter, Facebook, and other social media sites to create personalized and targeted ads.

For example, anyone who read my prior post could be served an ad from Coca Cola and a local ad for Bar-B-Que joints in the Seattle area. To make it more interesting, why couldn't Coke build an ad unit with a Coke bottle next to a Bar-B-Que sandwich.

Finally, Naj has a good summary and makes a great point about direct-response advertising. In the future, all ads should be direct-response.

Personalization is important, however, when advertisers are seeking a direct-response mechanism that can drive optimal online sales conversions. If you are looking to sell a product, it's natural to think that your conversion rates will be higher if you can target your message based on attributes such as personal preferences, gender, race or geographic location.

Now that we have the technology that delivers on the promise of personalization, agencies have no excuse not to find innovative ways to give their clients personalized campaigns to increase results and spend their media dollars more efficiently.