The Power and Pitfalls of Hyper- Personalization

In the dynamic landscape of modern technology, artificial intelligence and machine learning are revolutionizing the way we explore and shop online. But does the average consumer want AI-powered gifting suggestions or uncanny product promotions based on their clicks? 

A Game-Changer for Audience Targeting

Improving the customer experience is at the forefront of most enterprises. As technology allows advertisers to gather more information on consumers, businesses are able to deliver more tailored experiences. 

Hyper-personalization in marketing and advertising focuses on individualizing the customer experience across saturated markets. Ideally, they can use artificial intelligence, algorithms and machine learning to market products and services in a way that makes consumers feel heard. 

This is a step further from personalization, which utilizes basic demographic data about a consumer. Hyper-personalization factors in more advanced behavioral data like purchasing behavior, browsing activity and other recorded patterns. This allows for companies to make more informed decisions about selling to consumers, as they can create in-depth psychographic profiles that align with potential customers’ values, attitudes and even personalities. 

This paves the way for a more nuanced understanding of potential and current customers. This means a brand can hyper-personalize at almost any point of the consumer journey from an optimized outreach strategy to target certain segments or iterating their product offerings to cater to specific wants. Hyper-personalization is looking to narrow the scopes of marketing campaigns and product design to attempt to target the most niche segments possible, eventually shrinking to targeting individual consumers for their specific needs. 

Hyper-personalization means convenience for consumers, but the benefit is certainly not one-sided. It leads to brand loyalty, giving businesses opportunities to connect more authentically with consumers. It also provides more in-depth targeting, driving revenue for businesses by improving lead-quality. This means that with more accurate outreach, brands waste less spend on ads that aren’t reaching the right market. 

Potential Risks and Drawbacks 

Hyper-personalization can also lead to some resistance in marketing and trust toward advertising. In a Mintel survey of more than 1,700 people who recall seeing online ads in the last week, only 9% of them agreed that “Ads that ‘follow me’ across devices are more trustworthy.” For baby boomers, this drops to only 4% agreement, revealing a potential distrust in the hyper-targeting that comes with hyper-personalization. 

Consumers no longer just look for a product, service or business that resonates with them, as highly curated and customizable content is elevating the standard. Now, consumers expect products that add value to their unique lives based on their interests, habits, needs and wants. They even expect brands to anticipate their wants before seeking them out. 

But this practice, enabled by quickly advancing technology, should be approached with caution. Is finding the right consumer worth losing their trust?

Many consumers already trust in systems that capture behavioral data to enhance their experience, whether they know the technology is there or not. They leverage algorithms to suggest new music, movies and other products in social media and streaming. 

“Algorithms operate at the back-end of the interface people see when they log on,” said Liverpool University communication and media researcher Elinor Carmi. “This has specific ways of indicating and nudging people into what they should choose - from prioritizing things at the 'top' of search/display buttons, colors and even images." 

This type of hyper-personalization has become the norm across a variety of platforms, and will likely progress to become more accurate and integrated than ever.

Beyond digital streaming, subscription services in beauty, health, food, tech and fashion, have become popular. Here is where we see e-commerce quizzes suggesting a new clothing item based on your style or a tailored skincare routine based on your symptoms. More niche product recommendation tools include BedGear’s Pillow ID, which pairs you with a perfect pillow for your body type and sleep habits, or Litter Robot’s “personalized pet-care picks.” We are rapidly moving away from one size fits all marketing strategies, toward an approach that individualizes consumer experiences as specifically as possible.

These types of hyper-personalization tend to receive less public concern than targeting advertising, but with mixed opinions, it is up for debate. In an categorical analysis of 71 tweets  by Olga Koltsova on the topic of Netflix algorithms, most express positive feelings, although by a small margin. However, confusion and frustration about irrelevant recommendations were also common, and fear of ‘ruining’ one’s algorithm was also a recurring sentiment. 

Hyper-personalization in marketing is a game-changer, enabling businesses to tailor themselves to what we as consumers really like, or at least what they think we like. But, like most evolving tech, there's a common catch – privacy and trust. It's a fine line to draw, and the future of hyper-personalized marketing will depend on how well companies navigate it. Balancing means weighing advantages of behavioral insights from big data while prioritizing consumer trust, defining whether hyper-personalization truly resonates or risks alienating its audience.

By: Chloe Dill and Cooper Lanigan