Using online browsing records is only slightly more effective at tailoring marketing campaigns to specific audiences than simply randomizing messaging, a new study suggests.
The study, which will be published in the November issue of the journal Marketing Science, was led by researchers from the Massachusetts Institute of Technology in Cambridge and Melbourne Business School. They found that "digital consumer profiles" compiled from browsing records and sold by third-party data brokers are not the reliable guides for targeting and fine-tuning messaging that many organizations believe them to be.
The researchers ran three separate tests comparing randomized messaging to targeted outreach. Perhaps most telling were the results of the second test, which found that, in a campaign tailored to consumers' genders, the third-party profiles were able to identify gender at a rate "about the same as random chance," according to Nico Neumann, PhD, an assistant professor and fellow at MBS' Centre for Business Analytics.
Since third-party consumer profiles can be costly and seemingly offer only a slight improvement to targeted marketing efforts, the study's authors suggest the benefits of purchasing profiles may not outweigh the costs.
"In general, the process which underlies the creation of user profiles and segments for targeting is a 'black box,' which creates challenges for understanding the reliability and the accuracy of digital profiles," said Catherine Tucker, PhD, Sloan Distinguished Professor of management science at MIT. "Furthermore, advertisers have little chance of assessing how accurate the profiles they are buying are."
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