Personal problems: How digital leaders are thinking about personalization in 2024
Introduction
With over 75% of consumers more likely to consider buying products from brands that personalize, marketing personalization strategies have never been more important for fostering deeper customer connections in an increasingly fragmented online ecosystem. Marketers are confronted with new challenges as they seek to refine and enhance their personalization efforts.
But how prepared are we, really, for the future of personalization?
To figure out what’s on the minds of marketing leaders trying to personalize experiences for their audiences, we conducted a survey that sourced fresh insights from over 1,000 marketing, e-commerce, and IT executives worldwide.
The state of personalization: High time to step it up
Modern consumers expect their digital interactions to be tailored to their individual preferences – even before landing on your website. Yet, the reality for many companies is far from this ideal. With a staggering 86% of executives reporting that their marketing strategies often demand more advanced personalization than their current capabilities allow, it's clear that the marketplace is evolving faster than many vendors.
It comes as no surprise, then, that companies are responding to the broader need for more focused, more effective personalization strategies. 62% of executives have increased their personalization budget compared to last year—a clear indicator of the growing importance placed on delivering top-notch customer experiences.
But we’re not quite there yet
For many executives, integrating real-time personalization into existing systems and workflows has felt more like trying fit a square peg into a round hole. Despite its importance, leaders across the board are finding the complexities of personalization… incredibly challenging.
- While 64% of executives say their teams have begun implementing real-time personalization strategies, only 9% have reached full implementation.
- Just 26% of executives report having a unified definition of personalization throughout their organization.
- 21% of execs have no personalization strategy whatsoever.
So, what’s the hold up?
For many, the journey from recognizing the need for personalization to fully realizing its potential is fraught with challenges. If you’re looking to implement a personalization program and have been stopped by overwhelming data, difficulty with tech, or just workflow confusion, you’re not alone.
When it comes to obstacles execs are encountering with personalization, 44% say complicated or fragmented data is a top challenge.
- 43% say a lack of effective analytics holds them up.
- 40% say they have difficulty scaling their program.
- 39% say they struggle to implement the program in real-time.
- 36% say disjointed workflows are holding them back.
Bloated personalization toolboxes
To assist with personalization efforts, executives are reportedly using an average of 6 tools, including 39% who use 7+ tools.
Having a plethora of tools at your disposal might seem advantageous at first glance, but it most often results in fragmented systems and disjointed workflows. When tools aren’t well-integrated, data flow becomes isolated, inconsistent, and unreliable.
This fragmentation makes it challenging to get a holistic view of the customer journey, and executives often find their teams spending more time managing these tools than actually using them to enhance customer experiences.
Personal tip: Perform an audit of your personalization tools for good audience management capabilities. Does your personalization platform have strong integrations with the tools and platforms where your data is stored? Does the platform enable a full view of the customer and more efficient management of your audiences?
What’s at stake for marketers
Virtually all execs with a marketing personalization strategy (99%) are measuring their efforts’ ROI, specifically across three key categories:
- Sales per customer (49%)
- Time spent on site/page engagement (45%)
- Customer retention (44%)
But no single metric is used by even half of executives, suggesting a broad uncertainty on how to understand and track success for these efforts, which may explain why only 31% think their efforts are definitely improving their business’s bottom line.
Many companies are operating in the dark, an uncertainty only compounded by fear of financial repercussions. A significant 43% of executives fear that an ineffective personalization campaign will result in reduced future marketing budgets.
Personal tip: If the efficacy of your personalization campaigns are keeping you up at night, consider how experimentation can help. Multi-armed bandits are great since they show the best-performing option in real-time and automatically direct traffic to the best experience. This approach not only optimizes engagement but also continually refines your strategy to ensure your campaigns are always aligned with user preferences.
The (cookie) monster in the room
Third-party cookies have been the lifeblood of digital tracking, enabling marketers to understand and predict consumer behavior. And finally, after a years-long seesaw on Google’s behalf regarding their phaseout of third-party cookies, recent news lifted the dread that most were anticipating: third party cookies aren’t going anywhere—at least not yet.
But even though Google’s decision left many marketers rejoicing, it would be careless to ignore the striking 97% of executives who, in just May of this year, reported feeling unprepared for such a foundational shift in the data they rely on.
Marketers haven’t quite figured out what the future of third-party data will truly look like.
To support their personalization efforts, companies currently use user preferences (22%), past behaviors (21%), and nuanced personal information (21%)—many of which rely on third-party cookies. Although the immediate threat of third-party cookie deprecation has been delayed, the future remains unpredictable. Execs will have to continue to push for more innovative strategies and figure out new ways to use customer data as the future is subject to change and any moment.
What’s next: Time to shake things up
People have been buzzing about what to do for personalization for years—and execs need to get on the same page about what’s next.
Technologies like machine learning (53%), augmented reality (52%), and virtual reality (51%) are seen as the next big things in personalization. However, investment in these technologies is still in its infancy. More than 2 in 5 (41%) marketing leaders expect their company to invest in machine learning in the next 18 months, while around a third expect investments in virtual reality (34%) and augmented reality (33%).
Personal tip: One potential boon for marketing efforts could be experimentation, which executives already recognize as providing benefits including:
- Identifying mistakes (40%)
- Allowing for data-driven decisions (40%)
- Testing strategies before they run them (39%)
- Personalizing customer experiences (39%)
- Discovering which personalization strategies work (39%)
Currently, only 26% of executives are investing in experimentation for personalization use cases. And although more than half (59%) plan to do so, this gap represents a prime opportunity for forward-thinking companies to be proactive in gaining a competitive advantage.
Conclusion
The threat on third-party cookies revealed a concerning level of unpreparedness among digital leaders and their personalization strategies, with many companies only at the initial stages of developing real-time personalization capabilities.
However, this period of transition offers a unique opportunity for innovation and growth. The next few years will be crucial for organizations to adapt, innovate, and redefine the landscape of digital marketing and customer engagement.
As companies continue to step up their personalization game, those who successfully navigate these challenges will be better positioned to meet rising consumer expectations, build stronger customer
The Optimizely Survey was conducted by Wakefield Research (www.wakefieldresearch.com) among 1,000 Marketing, E-commerce, and IT Executives, with a minimum seniority of Director, at companies with a minimum of 100 employees, in 6 markets: US, UK, Germany, Sweden, Australia/NZ, Singapore, between May 2nd and May 14th, 2024, using an email invitation and an online survey. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points in the global sample, 4.4 percentage points in the US, and 9.8 percentage points in the remaining markets from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.