Sometime in the near future, companies will collect and analyze enormous amounts of personal consumer data and craft super-smart ads tailor-made for that shopper.
The near future must be an elastic concept, since experts and executives have been promising me exactly this since 2001. And yet, more than a decade later, the “personalized” ads that show up on my Facebook feed consist of sponsored posts telling me I can earn $1,800 a month by regularly donating to the California Sperm Bank.
Apparently Facebook figured out that I am a single male who lives in California and could use $1,800.
If that’s the best the world’s largest social network can do – especially with all the data I supply the company – personalized advertising has a long way to go.
“I see a lot of s-y ads,” Foursquare CEO Dennis Crowley recently told me. “I haven’t seen a lot of really targeted ones.”
Despite catchphrases like “big data” and “contextual experiences,” advertising largely remains a brute-force strategy. Companies like AT&T, McDonald’s and Macy’s spend billions annually carpet-bombing consumers across all platforms.
Many Fortune 500 companies are only now starting to explore the idea of using consumer information to craft better messages to shoppers. Like many major retailers, Best Buy is only beginning to craft an online advertising strategy.
“We have been working on a big-data project called Athena that will enable a more targeted approach to customer marketing, based for example on past purchases, browse history, location, and demographics,” CEO Hubert Joly recently told investors. “With Athena in place, over time we will be able to shift more of our marketing effort to targeted e-mail messages and offers.”
With its high-tech push into e-mail – yes, e-mail – Best Buy should hope it does a better job than photo-storage company Shutterfly, which recently e-mailed special offers to customers expecting babies. One problem: Many customers, including myself, weren’t expecting children. (Sperm banks? Baby photos? I’m starting to sense a theme here.)
Part of the problem with sophisticated advertising is simple: Companies just don’t know what they’re doing.
According to a recent survey by Forbes Insights and Rocket Fuel, more than half of the respondents indicated their companies often could not pinpoint the right audience. Less than 60 percent of executives said their companies understand who likes their products and why.
“Four in 10 executives do not have a handle on this important information about the consumers that they are trying to reach,” the report said.
Another problem is privacy concerns. Big-data-driven advertising only works if consumers feel comfortable sharing their data. And of the ones that do, they must possess confidence that companies will protect the information from hackers – a growing concern in the wake of breaches at Target and Neiman Marcus, among others.
Still, the growing use of mobile devices like smartphones and tablets offers tantalizing possibilities. For example, businesses can send messages to consumers as they walk by a store. The important thing is that companies demonstrate to consumers that their individual behavior drives the ad instead of the other way around, Crowley said.
“Most advertising needs that same justification,” Crowley said. “We showed you this ad because you went to this bakery four times. If we can show that transparency, you got this because of something you did in the real world that makes sense to people.”
In the past, “you walked past a Starbucks and your phone gets pinged with a coupon for a latte,” he continued. “That’s super, super annoying. But if you can tell me something about that place, ‘Hey, your buddy was at that exact cafe two days ago, and said this about it,’ that works.”
Pete Flint, CEO of the San Francisco real estate listing company Trulia, thinks apps from different companies will eventually communicate with each other and share consumer data.
“Trulia can connect with the Foursquare app,” Flint said. “Foursquare may know that you love coffee shops. You really care about going to Blue Bottle Coffee. We would able to recommend the condo that just opened up right above a Blue Bottle. There are a lot of apps that contain useful information. You just made a better experience” as a result of sharing that data.
“Once the data gets freed up, the innovations will be remarkable,” he said.
So when will this all happen?
“By the end of the year,” Flint said.
In other words, the near future.