The quest for ever-more personalization

We've talked in class about the benefits online retailers enjoy when they can personalize the experience of users browsing the site, presenting products or offers that are tailored to the interests of the visitor. As the tools for such activities increase in sophistication and decrease in price, a larger cross-section of web retailers are personalizing their user experience in new ways, in the hopes of boosting business. The WSJ posted an interesting summary of this trend here. (if you can't get to the article or don't have a subscription, email me and I'll forward the text).

The use of recommendations has been one winning way for online retailers to boost sales volumes. We saw this when Amazon introduced its "customers who bought this item also bought..." feature, way back when. Netflix also relies heavily on recommendations to keep its customers coming back for more movies, and in late 2006 took this quest for personalization to a particularly interesting dimension. The online DVD rental company offered $1MM in cold, hard cash to anyone who submits an idea that will increase the accuracy of its movie-liking prediction feature by 10% over the existing recommendation system, which synthesizes user ratings of given movies to predict how a user will like another movie. The contest (http://www.netflixprize.com/) has not yet produced a winner...

Given the money that these larger online sellers are willing to spend to secure effective personalization tools, it'll be interesting to see what becomes available in the next few years. For those of us going into marketing, I'm sure we'll be expected to know the latest tools and how to use them. I'm still skeptical of the longer-term implications of having everything "your way" -- will it ingrain already-held beliefs and preferences and turn society into trapped, narrow-minded consumers (not only of products, but news and information as well!)? Or will it reach a balance and then stop? Call me a cynic, but I'm fearful of what might happen if what we see on the all the websites we visit is chosen for us based on our past behavior and that of other, similar users.