Different platforms use different strategies of optimizing personalization to align with their own respective business goals. All three companies we are looking at, though, treat personalization as the engine behind engagement and revenue. Let’s take a look.
Spotify — Listening Time
Spotify’s recommendation system (Discover Weekly, Daily Mixes, what pops up on your Home Screen, DJ X — see my home page below, recommending me my favorite podcasts) all exist to maximize users’ listening minutes. Since Spotify’s revenue comes chiefly from premium subscriptions, the more time spent listening correlates with the perceived value of the premium service, boosting retention, the #1 driver of lifetime value. The ROI is high, as every improvement in recommendation accuracy compounds user stickiness and reduces churn.
LinkedIn — Session Frequency
LinkedIn personalizes the feed, notifications, job recommendations, and recruiter suggestions. The algorithm’s goal isn’t long sessions, but rather frequent reengagement, ideally users returning up to multiple times per day. This is because LinkedIn’s revenue model relies on recruiter tools and premium memberships. The ROI is strong, as the personalization they’re doing comes at a marginal cost and comes at a high reward of frequent visits to the app. See my job recommendations below. If I find that the job recommendations are good, I will frequently come back to the app as I embark on my internship search.
TikTok — Ad Targeting
The “For You” page is built on hyper-personalized short-form recommendations. Personalization is so huge for TikTok. It drives the metric that matters most for TikTok: ad targeting precision. The more accurately TikTok learns your micro-interests, the more advertisers will pay for high-conversion ad placements. The ROI is very high. Personalization correlates to much more time on platform and better ad relevance. I couldn’t find any ads on my TikTok (which I rarely if ever use), so here is a screenshot of something on my For You page — a Catholic themed EDM concert.
