Unlocking the Next Frontier of Personalized Marketing

As more consumers seek tailored online interactions, companies can turn to AI and generative AI to better scale their ability to personalize experiences. This article is a collaborative effort by Eli Stein and Kelsey Robinson, with Alexis Wolfer, Gaelyn Almeida, and Willow Huang, representing views from McKinsey’s Growth, Marketing & Sales Practice. Unlocking the next frontier of personalized marketing Here’s the challenge facing brands and retailers: Communicate clearly with a vast array of consumers who speak thousands of languages, hail from countless different cultures and socioeconomic backgrounds, and make purchasing decisions based on highly personal preferences. It’s no easy feat to reach all of these consumers on a broad scale in an authentic way. For some time now, companies have been trying to address customer needs through personalization, using data and analytics to craft more relevant consumer experiences. The goal is to present consumers with compelling offers and tailored, resonant messages at the right time. Today’s customers want more of this. As previous McKinsey research revealed, 71 percent of consumers expected companies to deliver personalized interactions, and 76 percent got frustrated when it didn’t happen. 1 When companies get it right, however, they can create significant value. Companies often deploy tactical, manual, and stand-alone solutions to engage their customers. But retailers are now entering a promising new era of personalization. To reach consumers where they are and how they want to be met, marketers can embrace two powerful innovations: AI-driven targeted promotions, and the use of gen AI to create and scale highly relevant messages with bespoke tone, imagery, copy, and experiences at high volume and speed. These innovations lay the groundwork for growth. Using improved analytics models, brands and retailers can better provide valuable offers to microcommunities wherever they want to engage. Meanwhile, gen AI enables marketers to create tailored content that January 2025 1 “The value of getting personalization right—or wrong—is multiplying,” McKinsey, November 12, 2021.