17 February 2023
by Isabelle Ohnemus
Uncertainty would appear to be the order of the day as a myriad of economic, financial, geopolitical, and environmental risks persist in the global economy.1 While the potential for a recession has been on the horizon for months, expert opinion falls on both sides of the divide.2 Call it a recession, downturn, or a mild contraction – uncertainty of this nature invariably plays out negatively upon consumer confidence.
The Conference Board Consumer Confidence Index slipped in January to 107.1 (1985=100), reflecting growing worries about a potential recession as rising interest rates and high inflation degrade the U.S. economy. A similar confidence gauge, the Conference Board Expectations Index, which looks ahead six months based on consumers’ short-term outlook for income, business, and labor market conditions dropped to 77.8 (1985=100) from 83.4. Less than 80 is seen as an indicator of an impending recession.3
Higher interest rates curbing consumer spending, inflation acting as a drag upon real incomes, coupled with the recently announced layoffs by major tech firms may fuel concerns over job security and corporate cost-cutting signaling a significant pullback in consumer spending.4
With advertisers spending approximately $29 to acquire each customer in 2022, compared with $9 in 2013,5 It is not surprising that during difficult or uncertain times, when trading conditions are challenging, brands turn to their loyal customer base as a steady, predictable source of income.
To rely on these predictable revenue streams, brands must offer highly personalized experiences that keep existing customers and attract new ones. Personalization is a way for brands to contextualize the messages, and experiences they deliver by leveraging technology and customer information to tailor products (and services) to the needs and preferences of individual customers.6
Personalization, however, is not new and perhaps not enough.
It is the exponential shift in consumer expectations and behavior, evidenced in no small way by the impact of Covid-19 and the compression of 10 years of e-commerce growth into three months,7 that is driving personalization.
Research shows that 71 percent of consumers expect companies to deliver personalized interactions, with 76 percent getting frustrated when this doesn’t happen. And in times when revenue is under threat, companies that leverage personalization effectively capture up to 40 percent more revenue from personalized marketing actions or tactics.8
Hyper-personalization appears to be the next-level experience that customers have come to expect.
As Steve Jobs once said:
“Our job is to figure out what they [customers] are going to want before they do… People don’t know what they want until you show it to them… Our task is to read things that are not yet on the page.”9
Hyper-personalization uses real-time data (such as browsing behavior, in-app behavior, use of devices, engagement data, purchase data, searches, and shopping carts), predictive analytics, AI, and automation to deliver more relevant content, product, and service information to customers.10
While many businesses will have accelerated their digital transformation efforts in the wake of Covid-19, there would appear to be a gap between consumer expectations and reality. Research indicates that many businesses are behind in their personalization drive, with 85 percent of the businesses believing they are offering personalized experiences. In comparison, only 60 percent of consumers seem to think that’s the case.
Data (lots of it) is the fuel, and technology is the engine of the operation.11
While the majority of customers demand a highly personalized shopping experience,12 just 40 percent of consumers say they trust brands to keep their personal data secure and use it responsibly.13 Put differently, an earlier survey found that 83 percent of consumers are concerned about sharing personal data online and 72 percent would stop buying from a company or using a service because of privacy concerns. 14
It’s a paradox, a predicament consumers face when reconciling their desire for greater personalization against their reluctance to share their personal information.15
Driven by high-profile data breaches (e.g. Yahoo)16, data ethics scandals (e.g. Cambridge Analytica), and revelations about government surveillance (e.g. Edward Snowden) mistrust in Big Tech and how it handles our data is growing.
In response to user privacy concerns the regulatory and technological landscapes are also evolving fast.
With the passage of the California Consumer Privacy Act (CCPA), Regulation on Privacy and Electronic Communications (ePR), and General Data Protection Regulation (GDPR) to name but a few, governments are seeking to protect the privacy rights of website users and are redefining the standards by which data is collected, stored and used.
“By 2025, 75% of the world’s population will have its personal information covered by modern privacy regulations … This reiterates the need for brands to leverage customer data with a proper understanding of customer preferences, terms of service and relevant regulation.”Brad Fager, Gartner Senior Director Analyst17
Google will begin phasing out third-party cookies in Chrome in the second half of 202418, joining Apple’s Safari and Mozilla’s Firefox. Commanding over 87 percent of the global web browser market share between the three browsers19, the advent of the “cookie-apocalypse” in so far as third-party cookies are concerned is upon us.
So what does a world without third-party cookies look like?
Digital marketing, in the absence of third-party cookies, will inevitably become a first-party data discipline. Brands will have to rethink their data strategies to stay competitive, exploring new technologies and first-party data capabilities if they are to deliver hyper-personalized customer experiences.
Personalization has become a crucial aspect of business success, with a majority of consumers viewing it as a basic requirement. Companies that are able to effectively implement and utilize personalization can experience significant benefits, including increased revenue growth, improved customer retention, and stronger, long-lasting relationships with their customers.
The vast array of martech solutions can be overwhelming and lead to purchasing unnecessary tools that do not address real business problems. As the number of martech solutions continues to grow, it becomes common to have an overly complex martech stack.
Measuring the ROI of campaigns and attributing performance is a common challenge for B2B marketers who use digital channels such as email, social media, and websites. To optimize campaigns and show the ROI of marketing efforts, it is crucial to accurately measure performance and KPIs.
However, many marketers face difficulties in accurately measuring performance, due to a lack of training and resources. While budgets continue to be invested in new technology features and functionalities, marketers may not know how to use them effectively. Martech has become more complex and requires trained marketers who can manage and utilize the technology.
Surveys have shown that many senior-level marketers worldwide find martech confusing (57 percent of respondents), creating more internal work (64 percent of respondents). With a shortage of talent and training, martech can quickly become a financial burden. The upcoming loss of third-party cookies will further complicate the use of martech, as data collection will change, and first-party data will become more important.
The trend is not encouraging.
In a more recent survey marketers reported utilizing just 42 percent of the breadth of capabilities available in their martech stack overall, down from 58 percent in 2020. The 16 percentage point drop in overall martech utilization in the past two years was attributed to a significant amount of overlap among marketing technology solutions (30 percent of respondents), difficulty identifying and recruiting talent to drive adoption/utilization (28 percent of respondents), and complexity/sprawl of the marketing technology ecosystem (27percent of respondents).
Maximize the value of your martech investment by:27
If we dare to dream for a moment and lift our gaze above the horizon, free from the overwhelming complexity of the technology and data that fuels our marketing efforts, a recent article by Blake Morgan in Forbes paints a picture of the shopping experience of the future.28
In her future, shopping will be characterized by personalization and technology-based experiences. Customers will be able to preview products, virtually try them on, and have them tailored to their specific preferences. The shopping journey will seamlessly blend physical and digital elements, offering customers exactly what they want, when they want it. Technology will be ubiquitous and enable companies to streamline routine aspects of customer engagement while enhancing their personalization strategies. Striving to find a delicate balance, companies will need to strike a chord between using innovative technologies such as AI, VR, and interconnected IoT devices, and adding a human touch to the customer experience.
If the users of marketing technology don’t take advantage of all the capabilities of their martech stack, the lack of utilization will persist and the credibility of CMOs as technology buyers and owners will be at risk. Budget cuts during a downturn merely amplify the problem.
Evaluating the current state of your martech stack is, therefore, crucial to overcoming underutilization, protecting against budget cuts, identifying inefficiencies, and redirecting resources to where they are needed.
Align marketing technology teams behind a clear set of martech adoption goals and KPIs that evidence success.
Act and monitor.
Use the customer data you have and sweat those martech assets. Your competitors are.
1World Economic Situation and Prospects: February 2023 Briefing, No. 169 | Department of Economic and Social Affairs. (n.d.). https://www.un.org/development/desa/dpad/publication/world-economic-situation-and-prospects-february-2023-briefing-no-169/
2Recession Fears 2023: What Lies Ahead? (2023, January 10). Forbes. https://www.forbes.com/sites/qai/2023/01/10/recession-fears-2023-what-lies-ahead/?sh=77344d2751d2
3US Consumer Confidence Declined in January. (2023, January 31). The Conference Board. https://www.conference-board.org/topics/consumer-confidence
4Kleinhenz, J. (2023, February 1). Monthly Economic Review: February 2023. NRF. https://nrf.com/research/monthly-economic-review-february-2023
5The Year Ahead: Digital Marketing in the Age of Privacy. (2023, January 26). The Business of Fashion. https://www.businessoffashion.com/articles/marketing-pr/the-state-of-fashion-2023-report-digital-marketing-privacy-customer-acquisition-retention/
6Chandra, S., Verma, S., Lim, W. M., Kumar, S., & Donthu, N. (2022). Personalization in personalized marketing: Trends and ways forward. Psychology &Amp; Marketing, 39(8), 1529–1562. https://doi.org/10.1002/mar.21670
7Five Fifty: The quickening. (n.d.). McKinsey & Company. https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/five-fifty-the-quickening
8The value of getting personalization right—or wrong—is multiplying. (2021, December 7). McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying
9A quote by Steve Jobs. (n.d.). https://www.goodreads.com/quotes/988332-some-people-say-give-the-customers-what-they-want-but
10Keating, G. (2021, June 2). Announcing The State of Personalization 2021. Twilio Segment Blog. https://segment.com/blog/announcing-the-state-of-personalization-2021/
11Rogers, P. (n.d.). The Dynamic Duo: How Data and Technology Are Transforming Personalization | Blog. Merkle. https://www.merkle.com/blog/dynamic-duo-how-data-and-technology-are-transforming-personalization
12The value of getting personalization right—or wrong—is multiplying. (2021, December 7). McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying
132022 State of Personalization Report | Twilio. (n.d.). Segment. https://segment.com/state-of-personalization-report/
14New Rules of Customer Engagement: Key Findings from Global Research. (n.d.). Salesforce.com. https://www.salesforce.com/resources/articles/customer-engagement/
15Powles, M. (2019, July 12). Personalization Versus Privacy: Making Sense of the Privacy Paradox. https://blog.hubspot.com/marketing/personalization-versus-privacy
16Biggest Data Breaches in US History [Updated 2023] | UpGuard. (n.d.). https://www.upguard.com/blog/biggest-data-breaches-us
17How to Straddle Personalization and Privacy With Customers. (n.d.). Gartner. https://www.gartner.com/en/articles/how-to-straddle-personalization-and-privacy
18Chavez, A. (2022, July 27). Expanding testing for the Privacy Sandbox for the Web. Google. https://blog.google/products/chrome/update-testing-privacy-sandbox-web/
19Gaubys, J. (n.d.). Most Popular Web Browsers in 2022 [Dec ’22 Update] | Oberlo. https://www.oberlo.com/statistics/browser-market-share
20Flavin, S., & Heller, J. (2021, March 31). A technology blueprint for personalization at scale. McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/a-technology-blueprint-for-personalization-at-scale
21The value of getting personalization right—or wrong—is multiplying. (2021, December 7). McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying
22Carlson, B. (2022, May 17). What is Driving the Future of Personalization in Marketing? CDP.com – Leading CDP Industry Resource For Marketing & Sales – News, Analysis And Thought Leadership Content on The CDP Industry. https://cdp.com/articles/what-is-driving-the-future-of-personalization-in-digital-marketing/
23Jayaraman, S. (2023, February 4). Martech Stack for 2023: A Full Guide & Best Tools. https://www.cience.com/blog/marketing-technology-stack
24Burrell, J. (2023, January 26). Avoiding Martech Nextopia in 2023. Enterprise Times. https://www.enterprisetimes.co.uk/2023/01/26/avoiding-martech-nextopia-in-2023/
25From Digital Transformation to Digital Evolution: Survival of the Quickest. (2022, June 8). Optimizely. https://www.optimizely.com/insights/from-digital-transformation-to-digital-evolution-survival-of-the-quickest/
26Gartner Survey Finds Marketers Utilize Just 42% of Their Martech Stack. (2022, October 3). Gartner. https://www.gartner.com/en/newsroom/press-releases/2022-10-03-gartner-survey-finds-marketers-utilize-just-42-percent-of-their-martech-stack-capabilities
27Maximize Your Investment in Marketing Technology. (n.d.). Gartner. https://www.gartner.com/en/marketing/insights/articles/magnify-your-investment-in-marketing-technology
28Morgan, B. (2022, December 15). Inside The Shopping Experience Of The Future. Forbes. https://www.forbes.com/sites/blakemorgan/2022/12/15/inside-the-shopping-experience-of-the-future/?sh=2bb527ed6221