The news that Black Friday/Cyber Monday (BFCM) sales are flat compared with last year's sales is about as exciting as a cheeseless quesadilla. Although between 51% and 54% of consumers were predicted to shop online during BFCM in 2021, according to market research firm Coresight, that won't translate to a big move upward in dollars.
Reuters projects US retailers will do about $11.3 billion on Cyber Monday and the days shortly before and after, which sounds like a lot but actually represents a decline from last year. The likely culprits are fewer juicy discounts and limited choices because of global supply-chain problems.
But there's another, lesser-known development impacting 2021 holiday consumers: E-commerce retailers of all sizes are increasing their customer data-collection activities in a big way. That's true not only of large e-commerce players such as Amazon but also of small and even local retailers that use e-commerce websites as convenient extensions to their brick-and-mortar operations.
E-commerce has become by far the favored purchasing channel for consumers due to COVID-19. But apart from turning that demand into buckets of holiday cash, one of the most important goals for retailers this year, according to a recent study called The Next Level of Personalization in Retail by Boston Consulting Group (BCG), was to build a more effective personalized-shopping experience.
The reason e-commerce retailers are chasing that goal so rabidly is because the BCG study also shows that good personalization implementation can push a revenue lift of up to 50%. Retailers using these technologies can see an average per-order increase of between 10% and 20% that also extends to purchasing frequency.
As a result, marketers across the business spectrum are putting personalization at the forefront of 2022's to-do list, with Gartner saying almost 25% of CMOs considered it a top priority in 2021, compared with 15% in 2019; an even higher bump is expected next year. BCG, in turn, claims that retailers of all sizes account for up to 40% of those businesses. And according to yet another study by Skynova, 64% of polled business operators were ramping up their data-collection efforts, particularly by using social media, and 79% of those were small businesses with between 51 and 100 employees.
The Hidden Market For Social Media Data
The most valuable data and still the most readily available is first-person data, which is basic demographic and purchasing data retailers can collect on their own using tools such as surveys on their websites, responses to email marketing campaigns, and keeping close tabs on buyers' purchasing histories.
But even though legislation like the General Data Protection Regulation (GDPR) has put a crimp in data brokers blatantly selling even more detailed data to anyone with a credit card, a few slightly more insidious ways are still left for even small retailers to bolster their customer-data stores. The most popular by far is social media marketing.
It's all done simply by advertising, especially on Facebook, according to the Skynova study. That's because ads purchased on social media sites go through an electronic bidding process. This is completely automated and consists of comparing two sides. On one side, ad buyers provide detailed parameters of the kinds of people to whom they want their ads served. On the other side is what the social media site knows about its users. Which is a big, nasty tub brimming with bits and bytes.
When a social media user logs on, hundreds or thousands of those ad buyers are sent whatever information the social media site has on them that corresponds with the parameters those advertisers put into the bidding engine. That can include anything from the person's hobbies and interests to demographic information or even an IP address.
That information is matched to what the advertiser wants in an audience, after which the advertiser's bidding software decides if it wants to bid, followed by the winner displaying its ad to the user. This all happens in less than a second. The insidious part is that the advertiser's bidding software can keep the data. So while advertisers aren't directly paying for customer data, which might be a violation of some legislation, they're nevertheless getting it and even paying for it, in a way, if their bid wins.
The electronic nature of the bidding process is what makes this kind of customer-data gathering such a level playing field. Anyone can advertise on Facebook, from eBay to Fred's Pizza down the street, and it's worthwhile even to Fred, because Facebook can target ads only to customers in Fred's vicinity. If Fred is good with data or simply hires a good consultant, then he can build a highly detailed and fully personalized online shopping experience simply by tweaking his online bidding software to retain and serve up the customer data it gets from Facebook or any of the other social media giants.
In the case of Facebook, you can put this opportunity into perspective using numbers from Hubspot. It's showing 8 million active advertisers currently using Facebook and serving their ads to an average of 2.6 billion monthly users, each of whom has provided Facebook with reams of personal data. With up to a 50% revenue hike on the table, you can bet that data is up for sale right now.