Site personalization is an essential part of any online advertising strategy.
It’s not just essential. It’s critical for long-term growth and even survival of traditional and online media companies.
Two companies that know this well are Google and Facebook. The two largest online advertising companies in the world generated $75 billion and $18 billion respectively in the most recent fiscal year, according to their public financial reports.
Google revenue grew nearly 14 percent year over year. Facebook revenue grew 44 percent during the same period.
Consider that all advertising expenditures will grow less than 5 percent in 2016, according to Advertising Age.
Consider as well that digital advertising online will grow 20 percent in 2016, Emarketer says.
That means the growth of Google and Facebook is coming at the expense of other companies in traditional media. It also means that Facebook’s growth is coming at the expense of other online companies.
Site personalization is key to their success with advertisers.
What is Site Personalization for Visitors?
The concept of site personalization goes back more than a decade in online media.
It began as a way of making a site more useful for visitors. For example, a site might display articles and headlines that are more relevant to the visitors if they created personal profiles with information about their interests and location.
They might be able to join discussion groups and have postings for those groups display on a personal home page. They could communicate more directly with people that had similar interests.
This led to Facebook and the kind of personalization that focused heavily on social communication. People could follow each other and communicate with individual followers or entire groups of them.
Google found other ways to personalize the user experience. The company started tracking user searches. It added a wide variety of services including email, documents, mapping, calendars, contact databases, etc. All of that information allowed the company to identify geographic and demographic information about its millions of users.
So these developments in site personalization led to more users who visited the products and services of the two companies more often. They fueled an enormous growth in audience that still continues today.
But the real value belongs to advertisers.
What is Site Personalization for Advertisers?
Personalization for advertisers is not a way of making Google and Facebook more personalized for advertisers.
It is a way of letting advertisers use the data provided by the visitors’ personalization to create efficient, cost effective and highly targeted advertising campaigns.
As the companies’ data grew, so did their ability to deliver even more targeted and more efficient advertising.
Advertisers began to understand this efficiency as profits came under pressure. They began to abandon old ways of advertising in greater numbers, which has been especially painful for traditional media companies such as newspapers, broadcasters, magazines and outdoor media.
Retailers in particular also did it out of necessity as ecommerce companies such as Amazon and Ebay began to take their market share with customers who liked the convenience and lower costs from online shopping.
What Should Small Online Companies Do?
The growth of Google, Facebook and a handful of other companies will continue to take market share away from competitors who don’t have the same databases in place to target using personalization.
But they do have the technology. Online content management systems have numerous ways of capturing visitor data.
High-quality data is essential, so sites need to give visitors can incentive to provide accurate information about themselves via contests, purchases, registration and other services.
Capturing zip codes is a simple way to start. Imagine developing a database with 1,000 or more users from the same zip code. With the right ad-serving software in place, an advertiser could run a campaign targeting those 1,000 users and pay a high CPM for the privilege.
Companies that are new to personalization need to realize that building a personalization strategy takes a great deal of time and effort before it pays off.
But as Google and Facebook have shown, that time and effort can produce great results.