The e-commerce solutions provider strives to further its commitment to personalization with a new acquisition.
Posted Jan 22, 2008
E-commerce solutions provider Art Technology Group announced today plans to acquire recommendation service provider CleverSet for $10 million in cash. The acquisition aims to enhance ATG's existing personalization technology to create a more relevant online shopping experience, which will, in turn, increase conversion rates.
"What we've acquired with CleverSet is a very sophisticated mathematical model that allows the system to watch, observe, and learn what kinds of relationships between the information work best to deliver a more relevant offer," says Cliff Conneighton, senior vice president of marketing at ATG. He adds, "It watches thousands of visitors and incorporates literally billions of data points from every move that every visitor makes -- and from that is able to predict the next, best move."
"ATG has made a strong play toward affinity selling," says John Lovett, senior analyst of site technologies and operations at JupiterResearch. "They're certainly looking at grouping segments and catering to groups of customers. I think that this new acquisition will really help them to really narrow the point down to the individual."
CleverSet Chief Executive Officer Todd Humphrey credits a technique called Relational Bayesian Modeling (RBM) for the application's ability to incorporate more data and to use that data to create models in real time. Similar technologies on the market, he adds, can only tell you that, for example, "1,000 people who looked at Item X also looked at Item Y." The problem, Humphrey says, is the assumption that the individual receiving the recommendation has the exact same preferences as the 1,000 people that came before her.
With every visitor and every click, there's potentially a different outcome -- and CleverSet's application takes every data point into account. By incorporating CleverSet's technology, ATG can provide an automated system that takes the burden off the merchant and delivers the best product recommendation based on the renowned theory of "the wisdom of the crowds." CleverSet customers have seen 20 percent to 50 percent lift in upsell, cross sell, and conversion rates, reports Conneighton.
Personalization is more than a buzzword now -- it's become a necessity. The marketing department needs to give consumers what they want, and behavioral targeting is bringing that goal one step closer. "Personalization has had a tough run," Lovett says. "Eight or nine years ago, the promise of the Web was a personalized experience: Everyone would have information and content catered to [his or her] needs and desires; but it really didn't happen that way. Consumers rejected the idea. They really weren't open to the Web." Now, he says, with the explosion of consumer information available on social networking sites as well as on e-commerce sites, personalization is given a second chance. On top of it all, he adds, people like getting recommendations.
"My belief is that personalization will be best delivered not on a one-to-one basis, but more on a one-to-segment basis," Lovett says. Therefore, by leveraging the data of the individual and combining it with collective data, CleverSet can obtain a more holistic understanding of what a consumer wants or may want.
ATG isn't the only company banking on this technology. While the specific offerings are not identical, Lovett sees similar acquisitions across the industry: Early last year, Omniture acquired behavioral targeting company TouchClarity (now rebranded as Omniture TouchClarity), and a couple months later Acxiom acquired personalized marketing solution Kefta and brought it under the umbrella of its Acxiom Digital unit.
ATG's challenge after this acquisition remains the same one that plagues the industry as a whole: Now that Web-site visitors are on board with personalization, it's Web-site operators who are resistant. Whether it's a concern over resources or consumer security, Lovett sees the attitude changing gradually as the results of personalized targeting become harder to ignore. While he says he expects more acquisitions in this space, the buying spree may come to an end: Soon, he says, marketing platforms won't have to acquire standalone personalization solutions anymore; the technology will be built directly into each vendor's suite of offerings.
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