There is a fine line between staying within limits and crossing them. The impact can be significant when that line starts to blur or when someone decides to disregard it. In marketing, this phenomenon is known as hyper-personalisation. Hyper-personalisation takes personalisation to a new level, creating highly tailored experiences for individuals. While personalisation relies on customers’ preferences, hyper-personalisation is based on advanced paradigms which provide suggestions based on a customer’s Internet history.. “In the context of data-driven personalisation, I think B2C consumers expect brands to deliver highly customised experiences, offering real-time recommendations that reflect their individual preferences and past behaviours. They demand integration across channels for a journey, both online and offline. Transparency and control over personal data are held crucial, with consumers expecting ethical data use and clear privacy policies. Additionally, they seek personalised value propositions such as tailored discounts and efficient customer support,” Ramya Chatterjee, chief, Solitaire, a brand of interactive flat panels and accessories, told BrandWagon Online.
The international hyper-personalisation sector, in 2023, carried a valuation worth $18.9 billion in 2023 and is expected to clock $74.82 billion in by 2033, at a 14.75% compound annual growth rate (CAGR) for 2024-33, as per The Brainy Insights, a market research and consulting firm.
The ethical dilemma: Privacy concerns and data security
Just like there are two sides to a coin, it is believed that there are two ways as to how brands should prepare their personalisation strategies. While hyper-personalisation offers benefits, it also raises concerns about brands potentially breaching consumers’ data privacy boundaries. Roughly 86% of companies highlighted the increase in business outcomes as a result of employing hyper-personalised strategies, as specified by Evergage, a Salesforce company. Furthermore, 78% of customers emphasised on being loyal to a brand on account of it providing personalised information, with regard to a report by Mckinsey & Company, a management consulting company. However, research has revealed the ‘creepy’ quotient surrounding hyper-personalisation, when brands tried to suggest personalised advertisements based on a user’s private information. 69% of customers expressed their displeasure around how mobile applications are utilised to gain insights on personal information, as per data provided by Internet Society, a non-profit advocacy organisation, and Customers International, a consumer-based membership group. “I believe that breaches and data misuse can damage a brand’s reputation and consumer confidence. When personal information is compromised, consumers may lose trust in a brand’s ability to safeguard their data, leading to decreased engagement and loyalty. Such incidents can result in negative publicity, legal consequences, and financial losses for the brand, highlighting the importance of data protection measures. Brands can mitigate these risks by enhancing their security protocols and communicating with consumers,” Vanda Ferrao, chief marketing officer, WOW Skin Science, a skincare brand, said.
Data has shown 32% of users showing their disapproving brands sending them personalised texts over fears around data privacy, along with 28% of people expressing their dislike of companies having their information without explicit consent, according to Instapage, a landing page platform. On that note, shouldn’t one ask this question as to how brands are able to get their hands on this sort of information? Well, there is understood to be a three-way answer to it, namely brands through the referral program system, surveillance software of smartphones, and buying history of a consumer. “Brands should draw a line between useful personalisation and intrusive tactics. Relevance, permission, transparency, customisation choices, and respect for privacy are considered key factors that distinguish between the two. Relevant personalisation tailors information, suggestions, and offers based on correct data and insights tailored to the customer’s preferences. Recognising users’ needs based on data, offering personalisation aligned with users’ interests, obtaining explicit consent before implementing personalisation efforts, defining the purpose of collecting data, and maintaining overall privacy of customers are examples of how brands can implement personalisation practices to serve customers without compromising their safety,” Vineet kumar, global president and founder, CyberPeace, a cybersecurity-based non-profit organisation, highlighted.
Creepy ads: Hyper-personalisation’s dark side
Over the years, there is believed to have been a growing trend amongst brands employing hyper-personalised tactics. In 2012, a store of Target, a retail corporation, mailed coupons for baby products to a teenager, sparking outrage from her father. While not a confirmed data breach, it highlighted how purchase history and shopping patterns could be used to infer private data. In 2018, Facebook faced criticism for allowing advertisers to target users based on health conditions gleaned from user activity and browsing habits. This case is understood to exemplify how hyper-personalisation can exploit user vulnerabilities by targeting them with potentially manipulative advertising based on health concerns. In 2019, speculation arose around how Amazon Echo devices were making use of their voice data technology for targeted advertising, based on accidental recordings of user-based conversations. In 2021, the Netflix controversy took place, after reports of “Are you still watching?” suggestions appearing on the application’s screen post a period of inactivity along with other recommendations considered ‘inappropriate’ on the customer’s side. As recent as 2022 saw concerns around period tracker applications potentially sharing user data with third-party companies, raising privacy worries. This data could have been used for hyper-personalised ads for pregnancy tests, fertility treatments, or even targeted marketing by insurance companies. Moreover, a 2023 study by Okta, an access management company, discovered disapproval from 32% of users of personalised texts due to privacy worries, with brands making use of personal data-oriented hyper-personalisation through SMS marketing, along with a 2022 survey by Pew Research Center, a nonpartisan think-tank, finding 69% of Americans lacking confidence in companies safeguarding their data privacy. “As data-driven personalisation becomes common, consumer expectations should evolve. Customers, now, expect brands to know their preferences and provide relevant recommendations and offers. However, they also expect transparency about data usage and privacy protections. I believe consumers want a balance where their data is used to enhance their experience without compromising their privacy or security. Brands need to meet these expectations by being clear about data practices and ensuring they respect customer privacy,” Upendran Nandakumar, founder, Ayatiworks Technologies, a digital marketing company, specified.
As for the need for regulations in the hyper-personalisation context, both the European Union’s General Data Protection Regulation (GDPR), implemented in 2018, and India’s Digital Personal Data Protection Act (DPDPA), put into action in September 2023, share a focus on user control over personal data in the age of hyper-personalisation. While the GDPR offers a framework with a four-year track record of enforcement, the DPDPA lays the groundwork for similar protections in the Indian market. A 2023 study by the International Association of Privacy Professionals (IAPP), a non-profit association, recorded 81% of organisations, globally, being impacted by the GDPR, highlighting its extensiveness. With a population exceeding 1.4 billion, market experts believe that India represents a significant market for data-driven practices. The DPDPA’s focus on user control has been upheld to impact the way companies personalise experiences for a vast user base. “The next wave of personalisation, hyper-personalisation, should require brands to adapt and prioritise ethics. Building a data governance framework can ensure responsible data collection and use. Personalization should be valuable, not intrusive, focusing on enhancing the customer journey. One should incorporate new technologies that prioritise ethical personalisation and minimise data collection when possible. These steps can help brands become leaders in ethical hyper-personalization, building trust, strong relationships, and securing their place in the future of marketing,” Ripal Chopda, chief marketing officer, The Sleep Company, a comfort technology brand, concluded.