Segmentation Good, Over-Segmentation Bad

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Almost human

So how much segmentation is too much?

“That's a loaded question,” says Chad Pollitt, author, professor and partner/VP for audience at the Native Advertising Institute.

“Generally speaking, as a marketer, you have to keep persona segments on the low end.”  That should be anywhere from one to five; three being ideal, Pollitt says. “With the personas, you craft specific content strategically targeted to those buyer types.”

So far, so good. It sounds like marketing hasn't changed. But then Pollitt dropped the bomb.

“Today, with artificial intelligence, machine learning algorithms, natural language processing and a host of other technologies, we're able to delve into big data.” Pollitt explains. Now it is possible to craft many “micro-segments," relying on AI to do the heavy lifting.

Over time, AI will filter those segments, discarding down to only the most effective ones. “Maybe machine learning determines that only 20 segments are valuable,” Pollitt says. But AI can also overlook LTV—Lifetime Value—of some segments, slices of the market that, while smaller, may generate more value through repeated sales over time.

People will craft the ads that reach those market segments in a language that resonates with those personas, Pollitt notes. IBM's Watson is perhaps the most well-known AI platform, but there is also Salesforce's Einstein. Other platforms beckon.

Pollitt offers Experian Hitwise as an example. Tapping into just a portion of all the clicks at the ISP level, Hitwise uses the data to craft 200 “eerily accurate” personas, right down to showing photos of homes, neighborhoods and TV preferences of “persona families,” just to illustrate the data.

“Introductory marketing jobs are being taken over by AI,” Pollitt says. Algorithms can handle work flows of e-mails and social, predicting which consumers will open and respond to e-mail pitches, and even cranking out personalized messages after comparing them against segment data.

“As long as the outcome and the KPIs reach the expectations of the boss, they are going to keep using it (the technology).” Pollitt says.

And the technology is only going to get better…

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