Algorithms And The Affluent: New Recipes In Marketing
Algorithms rule our world. They are pervasive “people replacements,” appearing everywhere and inside of most everything with a microprocessor. Where people used to diagnose illnesses, analyze foreign policy, make art, make war, buy media or write copy, now machine intelligence (thanks to the algorithm) does all of that. From your iPhone to your microwave to the elevator in your office, algorithms help us understand and navigate our world. They get us what we want and take us where we want to go—literally and figuratively.
These little recipes cook up all sort of value for brands, marketers and consumers alike. And it’s the algorithm that can make it harder to market to an affluent consumer. Affluent folks have a lot more algorithms working for them as filters for their valuable time and attention. So the level of effort and complexity required to reach and persuade them is exponentially greater than those proportionally less affluent.
A central concept at play is one we used to hear a lot about: the digital divide. Wikipedia succinctly defines it as “the actual or perceived inequalities between individuals, households and groups of different demographic and socioeconomic levels in regards to the access of information and communication technologies.”
In recent years the notion of a digital divide seems to have slipped out of our collective consciousness. Maybe our minds have been lulled into complacency with media mantras of broadband penetration numbers, Google’s seemingly endless product innovations, myriad dual-screen content experiences and Apple’s stellar Black Friday performance. But the digital divide is still very real and there is still significant disparity between access, knowledge and skills among groups.
When brands are marketing to the affluent in most cases they are marketing to algorithms before a human being ever sees the message. This may seem “far out” or science fiction but it isn’t really.
Agencies and brands have been constructing messaging for machine intelligence for some time now. One example I often cite is email marketing. Before we read an email it has been processed by all kinds of machine intelligence. Consider the routers that directed the message to your inbox, the filters making sure there is no virus or malware attached to the message, your personal priorities or subject matter filters, spam filters, etc. Algorithms drive all of those processes. Creative directors, copywriters, designers and technologists producing email marketing may not be in the business of creating algorithms — but they know how to persuade them.
The era of persuading machine intelligence sees the affluent marketer moving more towards a perception of the human touch. In a recent white paper, The Luxury Institute cites that the top 20% of the most valuable customers of multichannel and online retailers are turning more and more to personal shoppers to do their buying for them. Brands are training and incentivizing these people to essentially do their jobs better as shoppers by leveraging digital channels to develop deep customer relationships based on “expertise, trustworthiness and generosity.”
Part of the reason this is happening is that the arsenal of sophisticated, algorithmically driven tools for brand marketers pales in comparison to those used by affluent consumers to manage and protect their mind share. In an always-on, hyper-connected world, the mind-space of an affluent consumer is heavily protected by all variety of digital gate keepers.
The goal is to penetrate the guardians by “friending” or connecting directly with the consumer. Then a marketer can have permission to move past the algorithms to connect with the actual person. So, until sufficiently good, easy-to-use marketing technology is available at a reasonable cost to help the marketer navigate and manage the algorithms, the investment in training real people to develop personal relationships with affluent customers is likely a wise one.
But not every category behaves the same way as retail. Marketers need to be certain that their Key Performance Indicators for affluent targets are tuned to the realities of their category. Expectations do not always map to similar behaviors when it comes to affluent consumers. This was demonstrated clearly in Unity Marketing’s affluent travel report released earlier this year.
The study found that affluent travelers were most influenced by first-hand experiences. Digital travel properties with reputation management systems and reviews from actual travelers ranked as more influential than the advice of friends or relatives. This demonstrated that affluent consumers are absolutely using technology tools and reviews of people they don’t know to help them make travel decisions. So in this case, travel providers need to know how to connect with these consumers where these conversations are taking place.
What’s Next? Wearable Computing
So, how can an agency or a marketer get in front of all this?
Physical computing technologies are the next big thing. Algorithms are evolving with technologies that augment every aspect of our lives. A major focus of my expertise and client work is physical computing and its influence on shopper marketing.
The wearables segment is a great example of this growth and will have a huge influence on the next wave of innovation. Educating yourself and your agency about this trend will yield big benefits. Juniper research forecasts that wearable devices market will hit $19 billion globally by 2018. But before that happens, these devices, with their new algorithms, will first find their way to the affluent.
This year Gartner’s Hype Cycle for Emerging Technology put wearable interfaces at the peak of inflated expectations. But importantly, Gartner’s report focuses on mass—not the affluent consumer. And the affluent consumer is an important link to the mass market because they celebrate and popularize innovation.
Technology-enabled fashions such as Google Glass, the much-touted Apple watch, the much lambasted Galaxy Gear, Fitbit, NikePlus, Jawbone’s UP—the affluent adopt these first. Just like the first family on your block who had a TV, or later a PC or mobile phone, the digital divide widens for a moment—then eventually closes.
Agencies and marketers need to act accordingly.