Jennifer Polk
Mar 2, 2020

The personalisation trend is a puzzle that needs solving

The trend of brands combining personalisation engines and customer data platforms is risky but can be managed with careful observation.

The personalisation trend is a puzzle that needs solving

Earlier this month, software company Salesforce acquired customer data platform (CDP) and personalisation engine vendor Evergage. Alone this deal may not be noteworthy. But coupled with market growth, multiple mergers and acquisitions, as well as predicted vulnerability of personalisation investments, this latest move bears a closer look.

The pieces of the puzzle

In early 2019, McDonald’s bought personalisation engine vendor Dynamic Yield. In a seemingly harmless move Dynamic Yield continues to operate normally, it’s just restricted from serving McDonald’s competitors. Taken alone this raises questions about the rationale for the acquisition. Maybe McDonald’s saw the long-term benefits of owning a key martech capability. But it didn’t seem to signal anything major—until, of course, it did.

This would prove to be the first of many deals reshaping the vendor landscape:

  • In May 2019, ecommerce search and merchandising vendor Attraqt acquired personalisation platform Early Birds.
  • By year-end, CMS and personalisation engine vendor Acquia announced plans to buy the CDP AgilOne.
  • Kibo, an ecommerce platform owned by Vista Equity Partners (which already owned Certona), bought Monetate, another market leader and Certona’s key competitor.
  • And now, barely a month into 2020, Salesforce completed its acquisition of Evergage.

These moves, from partnering to purchasing, suggest that providers see the value of an integrated solution that applies machine intelligence to optimise all aspects of an online shopping experience. They also reinforce the trend of personalisation engines and CDPs becoming increasingly used as a dynamic duo. This marriage could help brands accelerate their personalisation efforts by better integrating and managing customer data.

Both can integrate customer-level data from multiple sources—retail POS, ecommerce and more. A personalisation engine uses this data strictly to optimise campaigns, commerce and customer experience across touch points. Yet a CDP applies a much-needed marketing lens and supports various uses.

Putting the pieces together

There are three distinct narratives behind this trend of mergers and acquisitions in the personalisation engine landscape:

  • Brands buying, rather than leasing, a capability that could be an integral part of their business strategy.
  • Combining a personalisation engine and their existing CDP to raise data integration, possibly increasing "stickiness" and yielding better personalisation results.
  • Simply acquiring competitors—possibly in a defensive move to eliminate a competitive threat, while also filling strategic gaps in a vendor’s own solution.

The external market forces here are evident. Marketers have been investing an average 14% of their marketing budget into personalisation. It’s estimated 44% of personalisation spend goes toward technology.

In the current "low-budget" marketing environment, double-digit spending on personalisation is risky business. This is especially true if that spend fails to make a measurable impact on revenue growth.

Gartner predicts that by 2025, 80% of personalisation efforts will be abandoned due to lack of measurable ROI or the costs and challenges of data privacy and data ethics.

Personalisation is already starving creative advertising of resources. It’s alluring because certain personalisation tactics, largely those related to ecommerce, are easy to measure and thus easy to justify. But brands now face a real risk of getting mesmerised by the glow of their personalisation dashboards, at the expense of building longer-term brand equity and awareness. As well as this, companies are under budgetary pressure to defund creative and brand, which often suffers from less rigorous measurement.

Making sense of the puzzle

The technology alone won’t solve marketers’ data problems. Deeper integration of first-party customer data will finally sharpen the ability to deliver measurable ROI in personalisation. However, as expected, the trade-off is the switching costs of moving between personalisation engines, especially if you’ve just bought one.

If you’re currently using one of the platforms that’s been bought, in the near term, it seems to be business as usual for most vendors. But it’s important to ask if your vendor continues to operate standalone or will it become part of its owner? And if you’re also adding a CDP, will it be operable with other personalisation engines?

In addition to the tools, you’ll need content, data and a watertight strategy you put your name on to get buy-in. As martech providers make "boss moves", equip yourself and your team to make a smart decision. You will find that decision will be less focused on the actual personalisation solution you need and more focused on how you’ll drive the greatest, measurable return from that investment.


Jennifer Polk is VP analyst at Gartner for Marketers.

Source:
Campaign UK

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