Lesson 8 // Personalization
China’s technology advances enable greater personalization
Brands identify consumers according to their interests
In a yin-yang contradiction, enormous personal data collection and advanced AI capabilities enable brands in China to reach the world’s largest mass market with the world’s most targeted, personalized messaging.
Three conditions make China most suited for personalization: (1) Many consumers willingly share their personal data; (2) The unrivaled amount of personal data is analyzed with world-leading AI; and (3) Consumers are relatively easy to target because almost 100 percent of China’s netizens access the internet using a mobile phone.
Rather than identify individuals based on traditional demographic categories, it is more effective to cluster them in circles of interest based on their attitudes, behaviors, and preferences. Engaging with individuals can yield a virtuous circle, as each engagement produces more data and the possibility of tightening the circle and creating new, related circles of interest.
Today, enabled by AI and other digital technology, many Chinese brands, such as the ecosystem brands Alibaba and Tencent, surpass their Western peers in the speed with which they can understand motivation and needs, personalize products and services, deliver rapidly, and cultivate trust.
By linking its consumer data and logistical capabilities, Alibaba can now recognize and fulfill even the micro needs of its customers, and rapidly fulfill them from the distribution center located closest to the individual customer. A customer ordering a cold beer, for example, can potentially receive it in just minutes.
In a final contradiction, reaching consumers requires brands to use certain mass media even as they pursue more targeted personalization. While spending on most traditional media has continued to decline, spending on out-of-home advertising has increased, particularly outdoor video and screens in public lobbies and elevators, according to GroupM.
Key Takeaways // Personalization
Brand Building for Future Growth
- Examine changing personal experience
Not only is experience becoming more important in China, it is becoming more personalized. Begin with the art of marketing and understand the broad social context of how experience is changing in China and becoming more personalized. Increasingly, people are looking for experiences that match their personal interests, talents, or skills. Belong to a niche group is an expression of individuality.
- Rely on cultural analysis
Shift from the art of marketing to the science. Over 800 million Chinese are online and almost all of them access the internet with a mobile device. And the exchange of personal data for benefits, a somewhat fraught bargain in the West, is readily accepted in China. That means understanding the personalities, interests, needs, and wants of individuals is possible with sufficient data collection and insightful analytics.
- Turn data into insights
Part of the personalization challenge in China is the abundance of data. Because people conduct so much of their daily routines on mobile phones, staying within a few ubiquitous ecosystems, it is possible to know when someone hailed a car for their commute to work, where they bought a morning coffee and ordered lunch to be delivered, what merchandise they bought online and the movie they plan to see in the evening. The challenge is turning all of these data points into useful insights to convert a collection of random behaviors into a coherent profile of an individual. After identifying a vast group of people with similar behaviors, rigorous analysis is necessary to discern who among them are the most likely customers for a particular brand or category.
- Identify audiences of shared interests
The traditional demographic categories are less useful in China, where people are rapidly moving up the income scale and migrating across city tiers. It is difficult to categorize people who are constantly in motion. While it is still important to know how much people earn and where they live, it is more revealing to know the topics to which they devote their time and attention. With this information it is possible for brands to find relevant audiences by identifying individuals according to their social media circles. Because of the scale of China, these audiences can be enormous. And because of their size, they are also diverse and fluid, with people moving in and out, which complicates messaging.
- Match content and media
Shift from art and science to communication and activation. Because of the diversity and fluidity of interest groups, it is easy to get the content wrong. An interest group comprised of beer drinkers, for example, could include adults of all ages, incomes, and regions of the country. More relevant than those demographic factors would be their devotion to the topic: whether they were casual drinkers who enjoyed a beer socially and at meals; or aficionados with extensive knowledge of the category who are always looking to learn more. It might intuitively seem as if one message could effectively serve the entire circle of interest. Kantar analysis has discovered, however, that because circles of interest are made up of sub-groups, reaching all the people within a circle usually requires multi- messaging and more than one KOL. And because people are constantly moving in and out of interest groups, it is important to keep the content fresh.