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Targeting, clustering, personalization: four key differences you should know

No message can be effective for every audience. This general rule is even more valid when it comes to marketing.

To create an effective message, it is essential to know who you are talking to. And, consequently, to shape the message’s contents and characteristics.

This can be achieved through careful audience segmentation – what is normally referred to as targeting; namely the division of consumers in groups based on specific common features. And consequently the delivery of a campaign built for one or more of these specific segments. If you have to promote an anti-aging cream, for instance, it would be appropriate to target groups of women older than forty. These are, however, only hypothetical recipients that marketers assume to exist somewhere out there.

A different approach to segmentation is clustering, which may look very similar to targeting at first glance but in fact is much more targeted to customers. In this case, the first thing done is thorough analysis of the customers’ characteristics, and only afterwards groups -or, better say, clusters – are created. Here, the segmentation is “ex post” and not “ex ante” as in targeting. Getting back to the anti-aging cream: with clustering, the campaign can be targeted not only to women of a certain age, but also to those women who live in a specific area, those who have previously shown interest towards cosmetics, or women who are usually high-spending. All this information is provided by customers themselves, for instance through questionnaires, purchase history, web browsing, or even geolocalization.

A different, much more response-generating approach to segmentation is represented by personalization, which is by far the best way to create an effective message. Unlike targeting and clustering, which are based on homogeneous groups, personalization focuses on individuals, with their actual characteristics and needs. Through this method, the consumer’s engagement increases significantly, as well as the conversions.

With personalization, the focus moves from a generic, stereotyped forty years old woman to Caroline, age 43, three kids, who lives in Union Square, San Francisco, who spends an average of $55 / month on cosmetics, and who has a strong interest in products with natural ingredients.

Communication strategies based on personalization can be carried out through different devices: they can be ads (display ads, re-targeting ads, and so forth) or personalized content, such as personalized videos. Doxee Personalized Videos, for example, are directly addressed to each single user, and each message is tailored on the person’s uniqueness.

Despite personalization being, without doubt, the most effective segmentation approach, it should be said that targeting and clustering can be valuable resources as well. It all depends on the specific goals of the campaign.

To better understand the differences between the three approaches, here are four key differences between targeting and clustering, on one hand, and personalization on the other.

 

1. Big trends versus individual choices

Targeting’s rules tend to be shaped on the base of what the marketers see as important. However, the risk is that what is perceived as important by the marketer does not match with what is actually considered salient by consumers.

In the best cases, targeting and clustering are based on big data, which are extremely valuable for measuring digital trends that are relevant for the company and to have a more precise idea of what the customers really want.

Also personalization mechanisms take advantage of big data. However, in this case, big data are used to create the best message for each user, focusing on specific behavioral data.

 

2. The updating process

In most cases, targeting and clustering require systems that are hard and slow to update. Every new parameter to be added to the system is strictly related to the outcomes of long and complex statistical analysis, which are only run periodically. Conversely, with personalization, the content showed to each user is unique, and it is based on the most recent information available about his profile, which can be automatically updated by the system itself, thereby speeding up the process, and reducing complexity. Think of the Facebook algorithm: it offers to every user a personalized news feed which is constantly updated depending on the user’s activity online (what he saw, what he shared, what he liked, etc.).

 

3. Segments versus people

Segments (or clusters) are often limited to a bunch of groups which are carefully monitored by marketers. For instance, a high-end watchmaker can easily turn to a previously-identified cluster of buyers in the luxury sector.

On the contrary, personalization allows for a quick and constant reaction to the users’ changes in behavior, that sometimes can be sudden and profound.

Take the personalized content shown by Amazon to each user. If, for instance, you switch from personal shopping to buying gifts for others, personalization allows the website to show us immediately a completely-different set of suggested products, which are tailored not only to a specific user, but for a specific user which is carrying out a specific action. All this, obviously, in favor of a more engaging user experience.

 

4. Effectiveness

Despite deep differences, targeting, clustering, and personalization share the same goal: to avoid the outdated approach “one-size fits all”, for which the same message is disseminated indiscriminately. All three aims at improving, on the one hand, the user experience and, on the other, fostering conversions and brand loyalty.

Despite the common objective, all the key performance-data show that personalization represents a much more effective tool for a successful market segmentation in comparison to targeting and clustering. Take a concrete example. In the case of user engagement with video content, Doxee Personalized Videos are watched from beginning to end by 78% of viewers. A figure that is far better from the ones reached by targeted or clustered videos, proving that only tailored messages can ensure high levels of engagement.

When deciding what approach to take in reaching your audience it is important to remember that personalization is about demonstrating to your customers that they are important enough to create the most engaging, interactive and relevant customer experience possible. With the new ability to easily speak to one customer at a time with rich content, in all media including videos, it is something all marketers should strive to do.

Find out with Doxee how personalization can empower your communications with your clients.

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