The key to advanced personalization is using inclusion as essential data for customization—inclusion is personalization
To help your audiences feel understood, valued, and inspired to act, I’m sharing the first part of our guide with ideas to create more personalized connections with your customers, ways to meet some challenges we all face in a generative AI landscape, and how inclusion leads to better performance.
I’ll outline steps you can take today to start enhancing personalization in your campaigns—but first, let’s start with the “why.”
Why you need advanced personalization
Personalization—like improving the relevance of your advertising messaging—allows you to create deeper customer connections, stronger brand moments, and more effective campaigns. Relevance in advertising delivers intelligent context, like nuanced interests, rather than rote mechanics like in an ad.
This can positively impact campaign performance in many areas. There are limitless connection points with people that can be used to make advertising more contextually relevant and inclusively personalized.
Personalization and context go hand in hand. For example, it’s not enough for me that you know my name within ad copy. But if you add inclusive context by offering vacation packages in destinations where laws protect me to feel safe as a gender fluid, bisexual woman, that can really make an impact. Or a parent planning travel may really value when easy to schedule car seat options surface within their vacation planning journey.
Simply put: Personalization through inclusion drives business growth.
“Personalized advertising is inclusive advertising.”
— MJ DePalma, Head of Marketing with Purpose, Microsoft Advertising
Increasing your revenue generation
There’s solid proof that personalization boosts the bottom line: Companies that excel at personalization generate 40% more revenue, and personalized advertising is up to 5X more valuable than contextual advertising. (We suggest using both personalized and contextual advertising, working together.)
One survey revealed that 86% of small or medium-sized businesses attributed revenue growth to personalized digital advertising, highlighting its importance for businesses of all sizes.
Improving your marketing efficiency
AI-powered personalization can also help brands tailor marketing efforts to individual needs, creating campaigns and ads based on multiple customer signals. Access to behavioral data and advanced analytics tools allows companies to improve operational efficiency through personalized content and advertising, increasing conversion rates and ROI.
Our recent playbook, A marketer’s guide to chatbots and agents: from generative AI to ROI, expands on this potential:
“Richer conversations and historical context now augment our ability to leverage behavioral insights, purchase patterns, and product preferences to support hyper-personalization at scale… Conversational AI is also helping marketers unleash their creativity and iterate fast enough to develop highly personalized campaign assets.”
Building stronger customer relationships
Personalization ensures the right message reaches the right customer at the right time, helping foster strong emotional bonds with customers. For example, customer relationship management systems integrated with advertising efforts enable businesses to launch personalized digital advertising campaigns across channels.
Opening doors to deeper consumer relationships makes renewals easier, increases the chances of conversion, and improves overall campaign effectiveness. Think of Spotify Wrapped, a well-known and successful example of personalized marketing.
While most companies want to advertise in this way, many are afraid of “getting it wrong.” But by understanding the challenges you might encounter, you can better overcome them.
The challenges brands face with personalization
Personalization has great potential, but without the right data, advertising teams can face major obstacles. Inclusive data sets can present a promising solution; however, challenges like fragmented systems, privacy concerns, and regulatory and compliance demands can also block progress.
The data you collect, how it’s structured, and how well you’re able to analyze it all play a critical role in avoiding bias. Incomplete or unrepresentative data sets can lead to “echo chamber marketing” that over-indexes on top-performing segments, failing to capture the full spectrum of your potential audience.
Cross-channel consistency is another struggle for many organizations. Providing a seamless personalized experience across various devices and platforms requires integrated strategies and tools. You want to deliver personalized content in the moment while staying relevant to multiple groups of people.
Personalization can also backfire when it crosses the line and feels overly intrusive. Ads based on broad assumptions or passive data collection can trigger concern or anger. Instead of building a stronger customer relationship, you risk damaging trust. Trust is earned in drops, but lost in buckets.
The promise of AI personalization is real
Addressing these challenges requires technology, processes, and strategy, all while running on a responsible AI framework. Using Microsoft’s Responsible AI Standards can guide you in evaluating AI-powered advertising solutions and help you improve personalization and audience engagement for maximum impact.
Generative AI enables conversational interfaces like chatbots and agents, creating less fragmented digital experiences. These interfaces allow seamless transitions between searching, shopping, and entertainment, enhancing user engagement. For example, Microsoft Advertising is launching a pilot product allowing brands to create smart, AI-based agents on their websites that can interact with users, provide personalized information, and improve customer connections and conversion rates.
Recognizing inclusion as a key data set can give you a competitive edge by powering hyper-personalization, enabling you to meet your audience’s needs precisely where, when, and how they want.
The key to advanced personalization: Inclusion as a data set
Consumers today want personalized, streamlined digital experiences. The new era of AI-driven personalization is shifting away from digital noise toward curated, hyper-personalized interactions. It’s no longer about just offering a discount on past purchases; it’s about recommending what customers actually need next.
Paul Longo, GM of AI Ads at Microsoft Advertising, describes one of the generative AI trends shaping the future of marketing:
“Personalization is evolving from general experiences based on demographics to highly individual interactions based on unique search intent, preferences, and context. And generative AI-powered solutions can help brands deliver hyper-personalized experiences at scale, leading to significantly higher engagement and conversions.”
Microsoft Advertising research shows that using overlooked data sources of inclusion in your strategy enhances trust, brand love, and loyalty. This kind of data drives an increase in purchase intent and improves brand perceptions of trustworthiness, market leadership, and likelihood to recommend—especially for Gen Z.
Having multiple data-touchpoints can produce high-quality personalization, creating the right message, at the right time, and with the right touchpoints, for the right problem that a person is trying to solve. It inspires them to feel, “This is a product for someone like me.”
