Does Targeted Marketing (with Personal Data) Work?

One of the key arguements for collecting personal search histories is that a “perfect search engine” will use this personal information to deliver more relevant advertisements. The supposition is that the search engines benefit from selling a more detailed profile to marketers, marketers save money by presenting only relevant ads to interested users, and users aren’t bothered with irrelevant advertising.

But Chris Hoofnagle points to this article, published in a database-marketing-industry magazine, that refutes the data industry’s own argument on the creation of a perfect marketplace through the use of consumer data:

With sharp advances in database marketing, the proliferation of data mining and the widespread adherence to principles associated with precision marketing, the logical expectation is that customer acquisition and retention rates would rise as direct marketers shift from mass marketing toward one-to-one marketing.

Not quite.

Though the illusion of effectiveness has been enhanced under the veil of advanced profiling, sophisticated analytics and targeted messaging, the reality for DM managers is declining response rates amid increasing industry mail volumes. The volume of household direct mail has more than doubled in the past five years while response rates have been halved.