Adaptive Marketing Set to Become the Next Big Thing
Fight Commodification by Personalizing Products and Communications
Advertising Age Byline
By Antony Young, Mindshare North America, CEO and Norm Johnston, co-global digital lead of Mindshare Worldwide
Google took a lot of heat last month when it announced its decision to incorporate personal data into its search results. The "Don't Be Evil" people were vilified by commentators and competitors. But its move was just another step in a shift by many marketers toward more actively tracking and responding to consumers.
Amazon gives shoppers personalized recommendations. Nike lets runners customize their trainers via Nike ID. Coca-Cola has introduced Freestyle vending machines, which enable patrons to create their own beverage by mixing together existing Coke products and then sharing their favorite creations with their friends via Facebook.
Consumers are increasingly comfortable providing their information with companies they know will use it to help personalize their products and communications, or companies providing essential services such as insurance. According to a recent study in the U.K., 75% of consumers that have an existing relationship with a company are happy to share their information with it, while 62% would share their information with a company selling products or services they need.
At Mindshare we have a name for this accelerated data-driven and consumer-focused mentality: adaptive marketing. It's an approach that enables marketers to truly tailor their activities in rapid and unparalleled ways to meet their customers' interests and needs based on data. It's not just about advertising, but adapting every part of the marketing mix as well as the product itself to connect more consumers with the brand, make it more relevant to everyone and deliver more benefits.
Why is this the most exciting development in marketing in decades?
Adaptive marketing allows you to create more personalized brands, thereby eliminating commoditization. Adaptive marketing rips apart the concept of "the consumer," a label that marketers have used to conveniently aggregate a picture of who they are trying to sell to. It assumes a classic model of mass-production, mass-appeal products promoted in mass media. The problem with this model is that it speaks to the most basic of needs, resulting in lowest common denominator marketing. This drives brands towards commodification, resulting in downward pressure on pricing... every marketer's doomsday scenario.
You can personalize your Kleenex box.
KLM lets you link your network with your seat.
Adaptive marketing looks to debunk that model. Personalizing a product to a customer increases its relevance and customer satisfaction, making it less likely they will want to switch brands.
Kleenex has introduced personalized packaging to great effect. M&M's allow you to order customized candies. Dutch airline KLM has just introduced a service called "Meet & Seat" to help travelers decide who they might want to sit next to by linking your Facebook or LinkedIn profile to your flight. (Presumably, you could also use the service to decide who not to sit next to.)
Behavioral pricing is an interesting idea that's being discussed where brands could differentiate pricing based on data collected. For example, consumers that "like" a brand could in theory conceivably be prepared to pay more. For prospects which have searched or visited a brand online, a marketer might be more willing to provide a bigger incentive to purchase.
Adaptive Marketing is about being more responsive to customers more quickly Communication is an essential part of the approach. Whirlpool responds individually to people complaints raised online about their appliances. Companies such as Starbucks and Apple for years have been crowdsourcing for new product and service ideas within communities on Twitter and Facebook.
Today's media, technology and data provide the channels to facilitate adaptive marketing. In a way media has always been integral in steering marketing strategy. National broadcast TV helped broad branding and awareness drive advertising. Magazines create opportunities to segment the market and promote products to niche targets. The early days of the internet ushered in e-commerce marketing.
Of course direct-response agencies have preached some element of response-based marketing for years. But the coming availability of addressable TV, location-based and hyper-local media platforms, digital out-of-home and the multitude of tablet and mobile media devices is making adaptive marketing a universal brand marketing opportunity.
Becoming an adaptive marketer can require serious structural changes. The entire media process -- budgeting, planning, buying, and optimizing -- needs to become more fluid and "always-on" rather than static and sporadic. Brands need to develop a library of creative assets -- images, calls-to-action, applications -- that can instantly be deployed into advertising units when required.
Aggregating, then mining, buyer and audience data to allow personalized product development, marketing and messaging is the key to unlocking adaptive marketing gold. That's going to be the next space race for marketers and their agencies. We hope you're ready.
ABOUT THE AUTHORS
Antony Young is CEO of Mindshare North America, a WPP media strategy and investment agency. Norm Johnston is co-global digital lead of Mindshare Worldwide.