CONTENT PERSONALIZATION ROUNDUP

July 2014 CONTENT PERSONALIZATION ROUNDUP Consumers are more likely to prefer relevant, personalized offers, while marketers find that making content personalized can be a major driver of digital revenue growth. Both marketers and consumers agree: Personalization is a must. To help you stay on top of the latest trends in content personalization, emarketer has curated a roundup of some of our latest coverage on the subject, including statistics, insights and interviews. sponsored by

CONTENT PERSONALIZATION ROUNDUP Overview Marketers and consumers agree: Personalization is a must. According to Tapjoy research conducted by Forrester Consulting, smartphone owners are more likely to prefer in-app ads that are tailored to them personally than virtually any other type. Only noninterruptive and reward-based ads were more popular. And about half of consumers told the International Data Corporation (IDC) they preferred relevant, personalized offers from retailers, even when the question contrasted that possibility with having retailers respect my privacy something many marketers would characterize as a false dilemma. Personalization is also effective. B2B email marketers around the world surveyed by Ascend2 and NetProspex placed it third in effectiveness, after only creating compelling content and segmenting lists. And US publishing executives surveyed by Cxense in conjunction with Editor and Publisher had similar feelings: more than a quarter agreed that making content personalized would be a major driver of digital revenue growth. But marketers have work to do to up their personalization game. Three in 10 of those surveyed in Western Europe by Adobe said they had plans to hire more staff with personalization expertise more than planned to hire more staff with mobile expertise. But that doesn t necessarily translate to sufficient attention to personalization, when so many other marketing objectives are vying for attention. Ascend2 found in May that just 11% of marketing executives worldwide said improving website personalization was important. Most Effective Tactic for Achieving Email Marketing Objectives According to B2B Marketers Worldwide, Feb 2014 Creating relevant and compelling content Segmenting email marketing lists 17% Personalizing email messaging 15% Integrating email with other tactics 10% Testing and optimizing email messaging 5% Sending autoresponse or drip campaigns 4% Optimizing email for mobile devices 2% Engaging subscribers via social media 1% Note: numbers may not add up to 100% due to rounding Source: Ascend2 and NetProspex, "Data Driven Marketing: B2B Email Marketing Benchmarks, 2014," April 1, 2014 47% 174867 www.emarketer.com Important Website Objectives According to Marketing Professionals Worldwide, May 2014 Increase lead generation 60% Increase traffic/visitors 50% Increase visitor engagement 42% Increase sales transactions 35% Increase brand awareness 32% 9% 11% 18% Improve mobile optimization Improve website personalization Improve customer service Note: n=336; in the year ahead Source: Ascend2, "Website Marketing Optimization Benchmark Summary Report," May 20, 2014 173832 www.emarketer.com Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 2

Loyalty Program Members Demand More Personalized Experiences Retailers turn to data and analytics to link consumer information Membership in US retail loyalty programs has grown to more than 1 billion, up from less than half that figure in 2006. As their experience with such programs deepens, consumers have begun to expect more personalized offers and services not just blanket discounts in return for their participation. Thanks to the increasing sophistication of behavioral and demographic data that digitally enabled loyalty programs provide, retailers can satisfy those desires while also addressing their own data needs, according to a new emarketer report, Loyalty Marketing 2014: Lessons from the Drugstore Chains. Merchants have gotten the message about relevance in growing numbers. In April 2013, RIS News found that retailers in North America were eyeing up increased investment in a host of loyalty marketing-related areas. Many of those efforts would occur in data integration and analysis. The relationship between loyalty programs and customer and sales data is synergistic. As much as loyalty programs need data to personalize messages, they also serve as a key source and connector of consumer behavior across different sales channels. Most consumers realize that they need to trade some private information to receive more relevant offers. According to September 2013 research by Forbes Insights, more than three-quarters of US business-to-consumer customers saw the benefit of trading personal information for more relevant discounts and offers, and 62% were willing to do so in return for personalized offers. Collecting customer data is only part of the challenge that retailers face. There s a huge leap from gathering data whether it s data collected from retail operations, demographic information volunteered by customers or data sold by aggregators to having data organized and filtered finely enough to provide personalized and individualized recommendations that enhance the customer experience. Loyalty programs, though, are a relatively straightforward way to link behavior across multiple channels. Areas of Loyalty Marketing in Which Retailers in North America Plan to Invest, April 2013 Multichannel data integration Analytics to understand customer behavior Pricing and communications personalization Marketing program communication frequency Social and mobile channel engagement Loyalty/rewards program rollout Customer usage and attitudes data acquisition 37.5% Loyalty systems upgrade, enhanced loyalty rewards 25.0% 53.1% 46.9% 56.3% 56.3% 50.0% 50.0% Source: RIS News, "The Power of Emotional Connections" sponsored by Manthan, May 6, 2013 167701 www.emarketer.com Benefits of Sharing* Personal Information According to US B2C Customers, Sep 2013 More relevant discounts and offers Personalized offers Stored shipping information Recognition as a valued customer Relevant product and service suggestions More frequent and generous loyalty awards 43% 49% 49% 54% 62% Note: *active or passive Source: Forbes Insights and Turn, "The Promise of Privacy," Oct 23, 2013 76% 165287 www.emarketer.com Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 3

Personalization Sees Payoffs in Marketing Emails Recipients willing to share shopping details, receive more emails At least one element of Big Data s potential is finally being realized in email marketing, which is one of the most effective means that brands and marketers have in reaching their audiences. Marketers can now take information gleaned from shopping habits and other preferences and then shape their messaging in order to have a greater impact on potential customers. But how do the customers themselves feel about these changes? A December 2013 survey of US digital shoppers conducted by Harris Interactive found that the majority of recipients of emails containing personalization drawing from previous shopping behaviors and preferences would be more likely to increase their purchases as a result. In fact, 81% of respondents said they were at least somewhat likely to make additional purchases, either online or in-store, as a result of targeted emails. Respondents also showed a clear inclination toward receiving more emails, as long as the new correspondence had taken into account past shopping habits. Fully 82% of those polled were at least somewhat willing to handle the increase in messaging, with just 18% indicating that they had no interest. A majority of consumers were also not shy about sharing more information about shopping preferences with retailers in order to improve the types of messages they would receive. Nearly seven in 10 said they would disclose personal facts if the emails they received were more relevant as a result. Likelihood that US Digital Shoppers* Will Purchase More Items** After Receiving Personalized Emails About Products***, Dec 2013 % of total Not at all likely 18% Somewhat likely 56% Extremely likely 8% Very likely 17% Note: numbers may not add up to 100% due to rounding; *who shop online more than twice a month and have signed up to receive promotional emails; **online or in a store; ***based on preferences and shopping habits Source: Harris Interactive survey sponsored by Listrak, Jan 13, 2014 168512 www.emarketer.com Willingness of US Digital Shoppers* to Receive Additional Promotional Emails from Retailers if Personalized**, Dec 2013 % of total Extremely willing 7% Not at all willing 18% Somewhat willing 56% Very willing 19% Note: *who shop online more than twice a month and have signed up to receive promotional emails; **based on past shopping habits Source: Harris Interactive survey sponsored by Listrak, Jan 13, 2014 168513 www.emarketer.com Part of this willingness is likely due to the fact that email recipients have already agreed to opt in to receiving messages, making them more accepting of emails with increased relevancy. emarketer projects that there will be 222.9 million US email users in 2014, with that figure climbing to 236.8 million by 2017. Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 4

Marketers Respond to Consumer Demand for Personalization Tailored messages and media increase response rates, sales as well as costs Consumers have already voiced interest in receiving personalized emails, and recent polling suggested that personalization would be a key trend across all communications this year. In a November 2013 study by Conversant, around three-quarters of US senior-level marketers and agency decision-makers agreed that individualized messages and offers will be more effective than mass messages/offers this year, and about the same percentage said personalized one-to-one marketing is the future. The reason for the rise in personalization s importance? Heightened consumer demand for messages related to their interests, which explains many of the benefits cited by executives polled. Agency respondents reported better response rates, increased sales and stronger brand perception as the top results of personalized media programs. Marketers also cited such benefits, but the No. 1 response among this group was increased repeat purchases. So, not only are consumers more likely to interact with personalized messages, they re also more likely to spend money with brands that implement targeted programs Benefits vs. Challenges of Personalized Media Programs According to US Senior-Level Marketers and Agency Decision-Makers, Nov 2013 Agency Benefits Improved response rate Increased sales Stronger brand perceptions Increased product trial/trial rates Increased repeat purchases/repeat rate Increased ARPU Marketer 70% 67% 63% 45% 36% 28% 56% 55% 56% 46% 60% 48% Challenges Higher media costs Increased marketing/ management complexity High creative development costs Creative issues/problems with quality creative Difficulty measuring campaign effectiveness Loss of creative/ brand control Source: Conversant, "What's Driving Marketing in 2014," Feb 4, 2014 64% 54% 63% 50% 60% 45% 41% 25% 50% 41% 34% 29% 169503 www.emarketer.com Personalization may be top of mind for executives thanks to its benefits, but challenges abound typically those related to high costs. Both groups of respondents noted that higher media and creative costs were among the top three challenges, the other in the group being increased marketing/management complexity. As marketers and agencies figure out how to measure the effectiveness of personalized media programs another challenge they will likely be able to determine whether the cost of running such campaigns pays off in the end. Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 5

Real-Time Marketing About More than Social Marketers define real-time marketing as personalizing content when responding to consumers Once considered a tactic purely for social media, real-time marketing (RTM) is now part of many marketing tactics and its definition has shifted as a result. In a February 2014 survey by Evergage, fielded by Researchscape International, around three-quarters of marketing professionals worldwide defined RTM as personalizing content in response to consumer interactions. This makes sense, given that more than eight in 10 marketers cited increasing customer engagement as a benefit to RTM, which is often done through personalized, targeted interactions. Social media was still the top channel respondents used for RTM, cited by 48%. However, websites and email were close behind, at 45% and 39%, respectively. Evergage noted that the variety of channels marketers were using for RTM indicated just how popular the tactic had become. More than one-third of marketers worldwide viewed RTM as extremely important to their organizations in 2014, according to Evergage. But an Adobe study produced by Edelman Berland and conducted by Research Now found different results that indicated US marketers did not view RTM as a top priority moving forward. Just 14% cited real time as important for the future the secondlowest response. However, Adobe s study broke out personalization, social media and real time as three different tactics, while Evergage found that many RTM definitions included personalized and social tactics. Most Important Marketing Tactic* According to US Marketers, by Level of Digital Spending, Feb 2014 Tactics that Qualify as Real-Time Marketing According to Marketing Professionals Worldwide, Feb 2014 Personalizing content or creative in response to customer interactions 76% Responding to customers in the context of their web interaction 74% Responding to trends and specific cultural events in social media Live website chat Triggered emails 54% Engaging with prospects & customers on social media with content and offers Mobile apps with geofencing Low** High*** Total Personalization 36% 31% 33% Big data 17% 22% 22% Social 22% 21% 21% Real time 18% 12% 14% Mobile 7% 14% 11% Note: n=1,004; read as 31% of marketers who have high digital spending budgets believe that personalization is the most important marketing tactic moving forward; numbers may not add up to 100% due to rounding; *for their company moving forward; **digital spending is <10% of total marketing budget; ***digital spending is 25%+ of total marketing budget Source: Adobe, "Digital Roadblock: Marketers Struggle to Reinvent Themselves" produced by Edelman Berland and conducted by Research Now, March 25, 2014 171323 www.emarketer.com 42% 49% 68% 66% Note: n=114 Source: Evergage, "Real-Time for the Rest of Us: Perceptions of Real-Time Marketing and How It's Achieved" fielded by Researchscape International, March 24, 2014 171402 www.emarketer.com Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 6

Next Up for B2B Email Marketing: Automation Email requires sophisticated systems thanks to cross-channel, personalization Email is one of the most widely used and established of all platforms and has long been the cornerstone of many business-to-business (B2B) marketing plans. Given the maturity of this medium, spending on email remained flat for years, though its efficiency did draw some B2B dollars during the economic recession, according to a new emarketer report, B2B Email Marketing: Benchmarks and Best Practices for 2014. But even as new digital marketing and advertising platforms, formats, and channels draw companies attention and budgets, email remains vitally important and is arguably more valued by B2B marketers now more than ever before. While its core function has not changed substantially, there are new developments and challenges marketers must address: mobile, content marketing and automation. For B2B marketers that use email and indeed for any B2B marketer today personalizing messages and integrating channels are vital, and automation is essential for executing those tactics. With content marketing now table stakes for email marketers and mobile making it critical that B2Bs reach the right individual with the right message at the right moment, it becomes nearly impossible to personalize email marketing without some form of automation. B2B marketers recognize the value of marketing automation solutions, but many have been slow to fully integrate the technology into their sales and marketing efforts. Data released in November 2013 by BtoB Magazine showed just 26% of US B2B marketers had completely integrated automation into their sales and marketing initiatives at the end of 2013. More than half (52%), however, expected fullmarketing automation adoption for this year. Level of Marketing Automation Adoption According to US B2B Marketers, 2012-2014 Some adoption 28% 10% 2% Moderate adoption 28% 28% 17% Strong adoption 22% 36% 29% Complete adoption, with integration of marketing automation into sales and marketing initiatives 18% 26% 52% 2012 2013 2014 Source: BtoB Magazine, "Marketing Automation: Best Practices in a Rapidly Changing World," Nov 11, 2013 166017 www.emarketer.com Important Marketing Automation Features According to B2B Marketers Worldwide, March 2014 Email marketing 89% Lead nurturing 84% Campaign management 82% Integration (CRM, social mobile, etc.) 80% Lead scoring 73% List segmentation 70% Campaign effectiveness analytics 61% Reporting tools 61% Landing page creation abilities 57% Web analytics 41% Website visitor demographics tools 39% API/integration 36% Sales intelligence 34% Social media integration 32% Visual campaign creation tools 27% Revenue cycle modeling 20% Website content optimization 18% Pay-per-click ad tie-ins 18% Marketing budgeting 16% Other 0% Note: among B2B marketers who use marketing automation Source: Regalix, "The State of Marketing Automation 2014," May 15, 2014 174846 www.emarketer.com Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 7

Next Up for B2B Email Marketing: Automation (continued) Automation solutions are often broad and can be applied across multiple channels and formats, but for most, email automation is vital. B2B marketers surveyed by Regalix in March 2014 reported that among marketing automation features, email automation was the most important to them. One significant insight from the Regalix data is that marketers say the email technology they need is not simply mechanisms to automate and manage email. Instead, they want sophisticated systems to manage cross-channel campaigns and deliver personalized, targeted experiences to customers. Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 8

Alex and Ani Personalize Mobile and Social Customer Communications Ryan Bonifacino Vice President, Digital Strategy Alex and Ani Mobile targeting is helping retailers like jewelry purveyor Alex and Ani to better reach their consumers with relevant messages. Ryan Bonifacino, vice president of digital strategy at Alex and Ani, spoke to emarketer s Rimma Kats about the current advantages of targeting and why privacy is still a big hurdle to overcome. emarketer: What is the current state of mobile ad targeting? Ryan Bonifacino: Mobile obviously changes every three months there s always a latest and greatest. In terms of social targeting, if somebody is logged into a device, it allows us to do things that we can do in the display world, like frequency capping. When someone is logged in, you can make assumptions about them. In the case of Facebook and Twitter those being our two biggest sources of spending on mobile we re able to do a lot of the things like multitouch attribution. So, going from mobile device to tablet to desktop, you can set your own parameters based on that session. emarketer: How are you using mobile targeting to drive sales? Bonifacino: We work with [mobile marketing platform] Swirl, which, for the most part, complements our brickand-mortar business. Swirl essentially takes advantage of ibeacon technology, which allows us to laser target users of the Swirl app with relevant content. If somebody is walking down Main Street and is unaware of Alex and Ani, we ve got the ability, through Swirl, to push information to them. When I say information, I just mean content, brand education or awareness, as opposed to, Hey, stop in to Alex and Ani and get a discount. We re not generally known as discounters. We re actually opposed to discounting for a variety of reasons. If we re able to have the right data-driven partnerships and push data both ways, we take advantage of that one-to-one personalization mindset. We either send a geographic message to that particular user or a charitable message. So we have a Charity by Design line that gives back to charity. These partnerships are actually product-driven, so you ll find a Stand up to Cancer charm bangle and the stories behind that bangle, and Instagram pictures of that bangle out in the wild that we capture and bring in through a moderation queue. That s all filtered to that individual user. On the geographic side, we re giving them relevant information about what that store carries. If it s one of our Denver locations, the content that we re pushing to that individual user is, Hey, support your team in the Super Bowl and buy an Alex and Ani product that just so happens to be a Denver Broncos charm bangle. By the way, here s something else you can do with the bangle. You can stack it up with all sorts of other stuff like your zodiac sign and your birthstone and your initial, the mom charm, if you re a mom, and so on. Given our unique array of SKUs, it allows for us to highly personalize that message, and that s kind of circling back to the technology side of this whole digital marketing ecosystem. Can we fuel that individualized content with something like a data management platform? So we re heavily investing in the DMP space as well. emarketer: Bluetooth low energy and beacon technology have been around for a while. Why do you think it s finally taking off now? Bonifacino: You look at the big players in this space and Apple stands in the front. Unless there s a unanimous decision in opposition to Apple, there s not much that s Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 9

Alex and Ani Personalize Mobile and Social Customer Communications (continued) going to happen in terms of adoption. So Apple kind of leads the pack and they finally came out and they made the big announcement that ibeacon was the standard. We did a pilot in the second and third quarters and it was wonderful. The data was great. The ability for us to drive traffic where we wouldn t have had traffic otherwise, made us continue the exploration of this technology. It just so happened that Apple s endorsement occurred between our beta and our rollout. So that endorsement led to I guess what I d call a widespread standard. Now it s such a big buzzword. All of my counterparts at other retailers are buzzing about ibeacon, and we ve been in the game for a couple months. emarketer: Do you find that data helps you personalize the messages that are triggered by ibeacon technology? Bonifacino: Completely. There are so many different segments of Alex and Ani customers. We re feeding information on a two-way basis. We re taking behavioral data and combining it with our first-party data. So just being able to understand if a customer has been in a store before or a customer has shopped online before or if we, for whatever reason, have data about customers and them shopping through our wholesale accounts. We ve got 40 stores, a big dot-com business and a tremendous wholesale business with Bloomingdale s and Nordstrom all the way at the top, down to the independent mom and pops of the world. If we re able to have the right data-driven partnerships and push data both ways, we take advantage of that one-to-one personalization mindset. We re big believers in the future of commerce being at the one-to-one level, regardless whether it s the point-of-sale, online or brick and mortar. emarketer: How do you go about sending messages so it doesn t seem intrusive and consumers don t get bombarded with it? Bonifacino: This is sort of the algorithmic answer. If we see that people are not opening emails at a particular time, and maybe they re getting delivery [earlier in the day] but they re opening in the evening, we automatically optimize the data that we re receiving on the open-and-click end. On a mobile device we put consumer privacy up there with what we would call our customer experience, in terms of the success of the brand. It s not a manual process where we re going in and saying, Record number whatever in Boston received a message, but they didn t open it until later. Let s change the delivery time. The systems that we use as part of our marketing stack allow us to kind of prewrite the rules, and we re able to rely on behavioral scientists that we could never afford to hire ourselves. There are only a handful in this country, one of which happens to be employed at an ad tech firm we use called Sailthru. emarketer: Have you done any retargeting in mobile? Bonifacino: We have done retargeting but only on social. We originally adopted a 75/25 in terms of display, which included mobile and social being the other side. So it was 75% display in mobile and 25% via Facebook s FBX. That number is now inverted. So we re retargeting 75% on social media. Most of that is through FBX. The remainder call it 10% or 15% is on Twitter, and the rest is through display and a little mobile. The problem is, when you serve a mobile ad, there s no way to really timestamp it in relation to all the different times we hit everybody prior to a first sale or repeat purchase. I just find it so much easier to rely on login information that both Facebook and Twitter are providing directly to their advertisers. emarketer: What do you think are some of the biggest hurdles with mobile targeting and how can marketers overcome them? Bonifacino: On a mobile device we put consumer privacy up there with what we would call our customer experience, in terms of the success of the brand. When it comes to privacy, a lot of retailers will just kind of get by with minimum expectations on privacy. A lot of brands don t [align] their investment in mobile and investment in customer experience to the legal investment they have to make. Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 10

Mobile Brings Personalized Touch to Ahold Supermarkets Rebecca Kane Vice President, Customer Specific Marketing and Digital Ahold Amsterdam-based grocer Ahold runs retail supermarket chains in the US including Stop & Shop, Giant Food, Martin s Food Markets and online store Peapod. Rebecca Kane, vice president of customer specific marketing and digital at Ahold, spoke with emarketer s Christine Bittar about shopper behavior and mobile efforts her stores have implemented. emarketer: Tell me a bit about your efforts in the loyalty area. Rebecca Kane: We ve actually invested quite a bit in loyalty, trying to continue to understand our customer better and make sure that we re delivering messages, communications and programs that are relevant. In the past, we were very focused on product-based promotions, and I think mobile has really started to change loyalty programs in that it s allowing us to provide services and better experiences and ones that are about more than just products. One example is our smart list. Customers who shop with us on a regular basis can build a shopping list based on what they purchase regularly. In the future, shoppers may be able to see what s on sale based on regular purchases, which is more of a service rather than just [offering] discounts. emarketer: What proportion of your loyalty members are accessing stores through mobile? Kane: Currently, about 10% of our customers are interacting with us through digital or mobile, but we want to grow that significantly it s the way customers are interacting with businesses these days. emarketer: How do you feel about that 10%? Is it where you expect to be right now? Kane: We know the percentage is growing rapidly, and we ve seen it with our SCAN IT! Mobile app. [It allows shoppers to use their mobile devices to scan and tally the price of their items and get personalized mobile offers based on previous shopping history in any store or location.] In the future, shoppers may be able to see what s on sale based on regular purchases, which is more of a service rather than just [offering] discounts. When we first launched it though, people weren t as comfortable using their mobile phones in this way, so there s actually an adoption [curve] and sometimes part of it is just about us creating awareness. emarketer: Besides convenience, are there any inherent differences in using a physical loyalty card or mobile loyalty program? Kane: The way we think about mobile is that it s a customer toolbox a way to give more solutions, and we actually need both in order to deliver [the optimal experience]. SCAN IT! Mobile is an example. If you re using the app, we can identify you as a member as soon as you come in, and we re able to give you updates and coupons immediately. It s incorporated in all of our retail stores Stop & Shop, Giant Food, etc. Over time, we believe it s going to become more of an expectation from consumers. emarketer: Where does personalization come in? Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 11

Mobile Brings Personalized Touch to Ahold Supermarkets (continued) Kane: When we think about mobile personalization, it s what enables customers to have some of the benefits I described. So for example, if a customer wants the benefit of building their list more quickly, what we need to do is be able to understand what they ve bought in the past and recommend what to put on their list. Our ecommerce company, Peapod, has a website feature called Guess My Order. Customers don t have to use it, but it looks at previous orders and helps users speed up the process. emarketer: Can you talk about digital couponing? Kane: It s very important that we continue to build our capabilities there. We talk about it as a load the card offer, meaning you can load a coupon to your account and the discount is automatically deducted from your purchase, so bringing paper coupons to the store isn t necessary. It s growing in importance for us and for manufacturers, although for us it s understanding that customers are less and less interested in carrying paper coupons and are looking for digital solutions. emarketer: Are there any other ways you would like to be able to personalize or expand the mobile experience beyond what you re currently doing? Kane: We want to understand shoppers needs around health for example, or have nutritionists in our stores for healthy eating advice. If it s useful and there s a way to take the knowledge from our nutritionist and convert it into something via mobile, that s something we d like to offer. In general, I think it s not just about promotions, but understanding and offering tools to help customers feed their families. Content Personalization Roundup Copyright 2014 emarketer, Inc. All rights reserved. 12