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The next generations' digital marketing sentiment reportPERSONALIZE-TO-PLAY

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In the last decade, the word personalization has become a staple in all digital marketers' dictionaries and strategies. At this point, we are

willing to bet that almost every pitch deck that has crossed a decision-maker's desk included the word or a synonym. However, when it

comes to implementing personalized strategies, the meaning seems to be left up for interpretation by each marketer. With conversations

ranging from narrow targeting to audience segmentation and time-delayed retargeting, what should personalization look like today and

in the future? Is it the way forward or just another trend living on borrowed time?

Before we dive headfirst into the next decade of online advertising in 2020, Adlucent has surveyed 900 U.S. consumers ages 18-64 to

gauge their sentiment and expectations regarding digital marketing. While shoppers across the board tended toward personalization, the

results of those 34 and younger spoke volumes for what to expect for the next decade: Personalized advertisements are no longer a nice-

to-have – they are a must-have.

So, what is personalization? What is the next generation of consumers expecting to get out of it? And, how will consumer sentiment affect

advertisers' media mix in 2020 and beyond? We answer these questions and more in this report.

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WHAT IS PERSONALIZATION?According to Salesforce, 67% of Generation Z and Millennials expect all offers to be personalized1. But what does that mean today?

Personalization can be traced back to the 1980s when Leonard Berry, a Texas A&M professor, first introduced the word "relationship

marketing." 2 He described brands' need to consider the importance of maintaining their audience relationship rather than only focusing

on their sale transactions. Similar to in personal relationships, consumers expect brands to listen and respond to their interests and hobbies.

Their shopping habits are not dictated solely by demographics or proximity.

Our survey found that: The number one reason consumers 34 and under click on an ad is if it applies to their interests, hobbies and habits.

Second to that, they click if it applies to their age, gender and location. Half of the respondents say they feel "annoyed" or "creeped out"

when served an ad for an item they just bought.

ONLINE SHOPPER SENTIMENT ON PERSONALIZED ADS

Most Likely toClick on an Ad

“If They Apply to My Interests,

Hobbies & Habits”

Feel Annoyed/Creeped Out When Served an Ad for

an Item They Just Bought

50%

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WHAT IS PERSONALIZATION?

What this translates to for marketers is that including a customer's

first name or city in an email, or retargeting immediately after

visiting a site is no longer personalized enough. To catch

consumer attention, brands' ads need to resonate with the

audience as individuals, giving them the impression that they are

being spoken to one-on-one. They want to feel understood based

on what you, as a brand, have learned about them from their

purchase history, the context of their online behavior, their buyer

persona and status, and other data they have willingly given up

in exchange for a better experience.

Although personalization is a widely adopted concept, the

complications of data segmentation and reporting have been

barriers to entry for many brands. However, with consumers'

expectations for the next decade proving personalization is

here to stay, brands must invest in the technology foundation

necessary to act on personalization tactics.

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NEXT GENERATIONS' EXPECTATIONS For our report, we focused on the

consumers who are influencing consumer

behavior, and will continue to, for the next

decade: Millennials and Generation Z.

Currently in, or coming into, adulthood to

become the next main contributors to the

economy, these generations are in their

mid-thirties or younger.

While specific buyer personas will vary

by industry and product category, we

delve into the expectations of younger

generations based on their attitudes, media

consumption and purchasing behavior.

When asked about their advertisement

experience online, our respondents

reported: 46.7% prefer relevant ads on

sites they access for free. Nearly 40% of

respondents recall clicking on an ad before

making a purchase.

To consumers in this age group, ads

are an expected part of their internet

experience. Valuing free access to the

websites they enjoy, they would rather give

up information to have a better browsing

experience than pay for access or be

bombarded with irrelevant ads.

Prefer Relevant Ads Based on Their Info

46.7%

While Adblockers are one of the many obstacles that have been deemed a danger to digital marketing, as platforms and browsers develop, the software is being pushed towards irrelevancy. With ad dollars as revenue drivers for online real estate, it is in the better interest of platforms and browsers to have their advertisements actually show while keeping a pleasant online experience. Many have invested in the further development of their technology to overcome the initial scans of Adblockers, breaking up their code and making it hard to discern, so that they too fail at differentiating what is organic and what is paid. To ensure their platforms offer a positive experience, they have also invested in their own version of AdBlockers. Google Chrome launched its own AdBlocker this year to the benefit of advertisers, only blocking ads on websites that serve non-compliant ads.

ONLINE SHOPPER SENTIMENT ON PERSONALIZED ADS

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NEXT GENERATIONS' EXPECTATIONS Nearly 40% of respondents recall clicking an ad before making a purchase. So, what about the other 60%? According to Statista, the

return on investment in digital search was 11 in 2018 and digital spend is expected to round $201.83B by 20233,4. Adlucent performance

data shows we are driving $2B+ in revenue through digital ads for our clients. So, what this 60% indicates is advertising has become such

a native part of the platforms where consumers are spending time that they don't always distinguish paid placement from organic.

Especially on social media, where smart brands have leveraged user-generated content into their paid campaigns, consumers scroll

through their feed, seamlessly interacting with posts from accounts they follow and those paid to be placed. This natural integration into

their feeds is a great benefit for brands. By making sure creative is customized for each platform and audience, companies can create a

positive experience for customers.

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66.7% have given up their email address to gain access to promotions, sweepstakes, discounts or notifications. 67.8% have logged into a

website with their social media account.

With major data breaches hitting the headlines like Facebook's Cambridge Analytical that resulted in the GDPR government data policy

change, the digital marketing industry came under fire just two years ago. As consumers' awareness of their data privacy grew through

these breaches, marketers were worried about the backlash that would result. In the face of these scandals, this report uncovers that,

when it comes to data, many consumers still value personalization and convenience over privacy. Consumers are, in fact, more aware of

their digital data, but their response is to demand more transparency from brands around what data they're collecting and how they're

using it — instead of keeping it under lock.

HOW DO THEY FEEL ABOUT SHARING THEIR DATA?

Gave Their Email to Access Promos 66.7%

Have Logged into a Site with Social 67.8%

THE DATA SHOPPERS SHARE FOR PERSONALIZATION

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According to our study, 66.7% of consumers under 34 have given

their email addresses to brands in exchange for some type of

access, sweepstakes, discounts or notifications. Doubling as a

unique identifier, email addresses can serve digital marketers

more than simple email marketing tactics. Brands can also use

consumers' emails to further personalize interactions throughout

the customer journey:

By leveraging email marketing, you can send customers and

prospects more brand and product information. And, by

uploading your customers’ emails to Google’s Customer Match,

you can reach your customers and similar audiences across the

entire Google network:

• On the Search Network and Google Shopping, you can

optimize your campaigns by adjusting your bids based on

what you know about your customers' activities.

• On Gmail, you can reach your customers or similar audiences

using personalized ads at the top of their inbox tabs.

• On YouTube, you can reach new audiences by targeting

audiences similar to your most valuable customers.

• On Display, you can reach your customers or similar audiences

using personalized ads on the Google Display Network.

By uploading your customers' emails to Facebook's audience

builder you can:

• Build customer audiences to retarget your existing customers.

• Build look-a-like audiences to reach new consumers who are

similar to your best existing customers.

HOW DO THEY FEEL ABOUT SHARING THEIR DATA?

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"Convenience" is the main reason why people buy online. For the best customer experience, removing or minimizing the barrier to convert

is imperative. Account creation is one of the hurdles that you can overcome by implementing a third-party login, such as Google,

Facebook, etc. on your ecommerce website.

According to our study, 67.8% have logged into a website with their social media account. Not only is a third-party login another way to

support your customer with continued "ease" of staying signed in, but it can also increase the likelihood of new customers creating an

account with you by saving them from form fatigue in the first place.

Third-party logins also provide the added benefit of brands collecting accurate, verified data – and more of it. While consumers are open

to providing their email address, they are not inclined to voluntarily offer further information, especially during account creation.

A great way to get richer user profiles is by leveraging social network logins. Accounts that contain rich data filled out by the customers

themselves, social network logins can give you access to: location, birthday, interests, and more. With deeper insights on your customers,

you can personalize your ad messaging and target more efficiently.

HOW DO THEY FEEL ABOUT SHARING THEIR DATA?

ASOS, Forever21, and AirBnB are three websites that have integrated third-party logins into their website for consumer convenience.

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4.27%One of our clients came to Adlucent intending to scale their

new customer acquisition program through social media.

With an already strong organic program that relied heavily

on sweepstake contests with partner brands, our client was

looking to push the initiative to the next level. By using the

email addresses gathered in these sweepstakes, we knew we

would be able to build out new look-a-like audiences for our

client to target. Aiming to scale, we then targeted the look-a-

like audiences with similar sweepstakes that we knew would

garner more information to continuously build out and refine

their audiences. This tactic resulted in the campaign driving a

4.27% click-through rate.

WHAT THIS LOOKS LIKE IN ACTION

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WHEN & HOW DO THEY SHOP?

The smartest brands serve ads based on understanding the

shopping habits of the younger generation as key to their

personalization strategy. For those 34 and younger, shopping is

available to them 24/7, as ecommerce's doors are always open.

No longer constrained by the hours of operation of their favorite

stores, this generation can shop what they want, when they want

it — and they take advantage of that freedom.

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WHEN ASKED ABOUT THEIR SHOPPING TENDENCIES...Over half shop at night and only 5.6% shop in the morning. The majority reported having spent up to $200 online as their biggest purchase,

and 25% report having spent up to $500. 50.6% said it takes them 2-6 days to make a purchase they consider a high order value.

The younger generations are shopping in their free time, and to over half, that often means into the night. Whether it is checking off their

to-do list before bed so they can sleep more soundly, or scrolling through their newsfeeds to catch up on what they missed during the day,

these consumers are shopping after dark for convenience.

WHEN & HOW MUCH CONSUMERS ARE SPENDING ONLINE

Over Half Are Shopping at Night

Majority Have Spent up to $200 Online

$200

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WHEN ASKED ABOUT THEIR SHOPPING TENDENCIES...Strategic brands have taken advantage of this tendency by

bidding up during late-night hours to capitalize on increased

traffic or launching flash sales during the evening hours.

Understanding when your audience is shopping is crucial to

targeting them in the right context, at the time they are most

engaged. If you are reaching out when they are not in the right

mindset, you not only waste ad spend, but show a disconnect

between you and your target audience.

It is important to note that, for the younger generations, it is not

uncommon to use a phone as a primary device, as opposed to

desktop. As many of their favorite apps are mobile-dominant

(think Instagram and Youtube), it is vital for brands to ensure their

creative assets are fit for the smaller screen. While you may be

bidding up on mobile during the late-night hours, this will not

serve you well if your creative does not take into account how

exactly this generation is shopping.

If the purchase a consumer is making is not routine or it carries a

high price tag, these late-night hours can also be understood as

research time.

According to our survey, 50.6% of young respondents said it

takes them 2-6 days to make a purchase of higher price value.

With Millennials earning less than any generation before at their

age5, they spend these days researching for deals, reviews, and

alternative options, making sure they are getting the best bang

for their buck. This delay in purchase gives brands time and

opportunity to re-engage and persuade the consumer to convert

through retargeting with relevant messaging.

Vogue Australia created an annual shopping holiday marathon named “Shopping Vogue At Night” that kicks off Tuesday night at 6 pm and runs for 60 hours until 6 am the following Friday.

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At Adlucent, we practice what we preach by pulling customer

insights to inform our bidding strategies for our clients. When

one of our clients with high-AOV products reached a plateau

in their search program, we focused on mapping out how and

when their customers were most likely searching versus shopping.

When we saw that their ROAS and revenue per 5-minute sessions

were above average on the weekends, we theorized that

their customers research on the weekends, but convert during

the week. So, if they were underspending on the weekends,

we hypothesized that their weekday conversions were being

negatively impacted. Putting our theory to the test, we reinvested

some of our Thursday and Friday morning campaign budget into

high-traffic weekend campaigns and midday and late-night

during the week. By reinvesting our morning weekday spend, we

helped the client achieve. $1.1MM QoQ revenue growth, with

32% of that growth attributed to weekend “time of click.”

WHAT THIS LOOKS LIKE IN ACTION Back in 2016, we ran a similar

sentiment report that found 71% of respondents preferred personalized ads tailored to their interests and shopping habits. What's more, 44% of respondents were willing to give up information, including name, address or email address, in order to get more personalized advertising6.

Flash forward three years, and these key findings still ring true and have increased in importance. Even in light of data breaches and privacy concerns, shoppers’ willingness to give information in order to experience and see products and services that are relevant to them has increased by 34% since 2016.

Supporting our findings that consumers prefer a personalized ad experience, Epsilon found that four-fifths of consumers are more likely to make purchases when a brand gives them a personalized experience7. And according to a recent Accenture study, 87% of consumers reported that it was important to them to buy from a brand or retailer that “understands the real me.”8 Overall, Adobe summed it up best, reporting that personalized content is at an all-time high9.

WHAT ARE OTHER INDUSTRY SURVEYS REVEALING & HOW DO THE FINDINGS COMPARE TO THIS ADLUCENT SURVEY?

1.1 MM QoQ Revenue Growth

32% of Growth Attributed to Weekend “Time of Click”

$1.1MM 32%

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KEY TAKEAWAYPersonalization is a double-edged sword in that, if it's done well, it likely goes unnoticed by the consumer, as it is a seamless integration into

their online experience. But, if it isn't done well, or not done at all, the poor user experience for the consumer becomes an eyesore that

stays with them. Although the next decade will present more opportunities for advertisers to meet consumers' need for personalization, it

will bring even more challenges. As brands start planning for 2020 and beyond, enabling their teams to customize their marketing initiatives

to the hobbies, interests, and habits of their audience must be a top priority.

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Adlucent is a marketing technology and analytics agency based in Austin, Texas. Leveraging its proprietary Deep SearchTM bid

management, digital, and retail analytics platform, Adlucent’s experts help brands acquire new customers and grow revenue efficiently

through digital marketing.

WORKS CITED ¹ Salesforce Research (2018). “Trends in Customer Trust”. Salesforce Research.

² Berry, Leonard L. (2002). "Relationship Marketing of Services Perspectives from 1983 and 2000". Journal of Relationship Marketing.

3 Digital advertising spending in the United States from 2018 to 2023 (in billion U.S. dollars)

4 Return on advertising spending (ROAS) per dollar invested in the United States in 2018, by medium (in U.S. dollars)

5 Pew Research Center (2019) Millennial life: How young adulthood today compares with prior generations Report

6 Adlucent (2016) Personalization Report

7 Epsilon (2018) “The power of me: The impact of personalization on marketing performance.”

8 Accenture (2019)

9 Adobe (2018) Consumer Demand For Personalized Content Reaches All-Time High

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