MarTech Podcast ™ – Episode: The History Of Personalization
Host: Benjamin Shapiro
Guest: David Edelman, Senior Lecturer at Harvard Business School, Executive Advisor at Edelman Advisory Services, and Author of Personalized Customer Experience in the Age of AI
Release Date: January 6, 2025
Introduction
In this engaging episode of the MarTech Podcast™, host Benjamin Shapiro delves into the evolution of personalization in marketing with esteemed guest David Edelman. Edelman, a Harvard Business School lecturer and marketing expert, shares his extensive knowledge on how personalization has transformed from rudimentary targeting to sophisticated, AI-driven customer experiences.
Early Stages of Personalization: Direct Marketing (00:32 - 06:00)
David Edelman begins by tracing the roots of personalization back to 1989, predating the Internet. During his tenure at the Boston Consulting Group, he observed that early personalization efforts were primarily focused on direct marketing—utilizing direct mail and telemarketing to target specific customer segments.
David Edelman [02:32]: "The first wave was basically what we called direct marketing. It was direct mail telemarketing. And most of it was fairly reductive... It was more about targeting and reductive to be efficient in terms of spending your budget."
Edelman explains that while these methods allowed for targeting, personalization was limited to broad segments rather than individual customization. For instance, companies like L.L. Bean would send catalogs that, while somewhat tailored, lacked the depth of true personalization.
David Edelman [04:21]: "It wasn't excessive personalization, but it was really more basic segmentation... we'd send a Focus phishing catalog for you."
The Internet Era: Data-Driven Personalization (06:00 - 09:34)
With the advent of the Internet, personalization took a significant leap forward. Edelman highlights how real-time data collection and digital channels like email allowed marketers to target individuals more precisely.
Benjamin Shapiro [06:00]: "When the Internet era first started... what we're calling personalization is only around targeting, essentially the creative is basically the same."
Early Internet personalization involved A/B testing of emails, optimizing subject lines for higher open rates, and tailoring landing pages based on user interactions. This era emphasized data-driven strategies to enhance marketing efficiency and effectiveness.
David Edelman [07:18]: "If Ben versus David got different offers for different products, you would know what you had actually sent them."
Web 2.0 and the Rise of Multifaceted Personalization (09:34 - 13:39)
As Web 2.0 emerged, personalization expanded through mobile integration, content management improvements, and the proliferation of digital advertising and social media. These advancements introduced new outbound channels and richer data sets, allowing for more sophisticated targeting.
David Edelman [07:39]: "We get into three different things that happen in the Web 2.0 era: Mobile, content capabilities, and digital advertising and social media."
The integration of location-based targeting and app notifications enabled marketers to reach consumers in diverse contexts and moments, shifting strategies from broad campaigns to more responsive, real-time interactions.
David Edelman [09:34]: "Instead of just saying, I've got a campaign, who am I going to send it to?... I have an opportunity to sell Ben. Let me put together the right thing through a channel. Ben tends to react to and send that to him right now."
Influencers and the Democratization of Personalization (12:41 - 13:54)
Benjamin Shapiro introduces the concept of influencers as a pivotal development in personalization. The rise of micro-influencers—everyday individuals with niche followings—has transformed how brands engage with consumers.
Benjamin Shapiro [11:24]: "Every person becomes this influential figure in your life... it's like, oh, you know what? Mom makes a little money off of being a YouTube celebrity."
This shift underscores the importance of personal relationships and authentic endorsements in enhancing personalized marketing efforts.
The AI Era: Beyond Marketing to Comprehensive Customer Experience (13:54 - 19:43)
Transitioning into the AI era, Edelman emphasizes that personalization is no longer confined to marketing tactics but has become integral to the overall customer experience. Brands like Netflix, Spotify, and Uber exemplify how personalized data-driven experiences can drive engagement and loyalty.
David Edelman [12:41]: "We're moving from thinking about this in just a marketing frame of mind to one that's about more broadly, customer experience."
Edelman shares his experience at Aetna, where personalized videos were used to help customers understand their health plans, resulting in improved customer satisfaction and reduced call center inquiries.
David Edelman [14:07]: "We found a capability from a company called Sunday sky that can do personalized videos... that led to fewer calls into the call center, Net promoter scores going up."
He contrasts this with poor personalization practices, such as Nespresso's aggressive sales tactics, highlighting the importance of zero-party data—information willingly shared by customers—to enhance personalization authentically.
David Edelman [16:59]: "What they could have done is ask me... that's zero party data. I'm very happy for you to have that data and then use it to serve me better."
AI-Driven Data Management and Continuous Learning (19:43 - End)
Edelman discusses the challenges of managing the abundant data marketers have access to, likening it to a river that requires careful management to harness effectively. He stresses the necessity of continuous testing and learning to discern which personalization strategies resonate with different customer segments.
David Edelman [19:43]: "Good marketers are constantly testing and learning... using AI to create and manage different test cells to find the best approaches."
AI tools like multivariate testing and machine learning algorithms are pivotal in identifying and implementing the most effective personalization tactics, ensuring that marketing efforts evolve based on real-time data and customer behavior.
David Edelman [21:46]: "It's not just understanding what the outcomes are, it's understanding what variables actually have an impact as well."
Conclusion
In wrapping up, the discussion underscores that personalization has evolved from basic targeting to a sophisticated, AI-driven strategy that permeates every aspect of the customer journey. Edelman's insights highlight the critical balance between leveraging vast data and maintaining authentic, customer-centric experiences.
Notable Quotes
- David Edelman [02:32]: "It was more about targeting and reductive to be efficient in terms of spending your budget."
- David Edelman [04:21]: "It wasn't excessive personalization, but it was really more basic segmentation."
- Benjamin Shapiro [06:00]: "Personalization is only around targeting, essentially the creative is basically the same."
- Benjamin Shapiro [11:24]: "Every person becomes this influential figure in your life."
- David Edelman [12:41]: "It's about more broadly, customer experience."
- David Edelman [14:07]: "That led to fewer calls into the call center, Net promoter scores going up."
- David Edelman [16:59]: "That's zero party data. I'm very happy for you to have that data and then use it to serve me better."
- David Edelman [21:46]: "Understanding what variables actually have an impact."
Connect with David Edelman
- LinkedIn: David Edelman
- Company Website: Edelman Advisory Services
- Book: Personalized the Book
Stay Tuned
For more insights on marketing and technology, subscribe to the MarTech Podcast™ and follow us on YouTube, Twitter, Instagram, and TikTok. Connect with host Benjamin Shapiro on LinkedIn at Benjschapp.
This summary captures the essence of the conversation between Benjamin Shapiro and David Edelman on the history and future of personalization in marketing, highlighting key developments and the transformative role of AI.