How Dynamic Yield is using the weather to control what you eat.. and getting rich in the process

The media just announced that MasterCard is buying Dynamic Yield. This is a quick turnaround from 3 years ago when McDonald’s acquired the technology company for $300 million. But what exactly is Dynamic Yield and what are they doing that’s so effective?

At their core, they’re a personalization and contextualization recommendation engine which uses data to help businesses make more money

Let’s break that down a bit.. starting with personalization. When you visit a website using their technology (Sephora, for instance) Dynamic Yield stores a unique ID in your cookies, your session storage, and the local storage of your browser. This lets them track and target you based on your behavior and metadata. They aggregate as much of your data as they can and use it to build a psychological profile for you. They then use this profile to help predict the types of content you will respond well to — content you will have an affinity towards. Over time people’s interests and views change, and because they are monitoring those changes they are able to adapt their content strategies in real-time.

The shift towards personalization is happening across industries and it’s happening fast. According to Dynamic Yield’s personalization maturity report, 31% of companies say they’re utilizing personalization to improve digital interactions. 93% say they value personalization and aim to make it a core component of their customer experience operation strategy.

Let’s get practical about what this looks like and how it actually drives revenue. In the publishing sector, Dynamic Yield dramatically improves website performance by tailoring page real estate to the person visiting the page. If you’re the type of user who clicks on ads, they’re going to show you two to three ads per session. If you do not click on ads but you enjoy video content, they’re going to show you as many videos as they can to maximize their CPM video ad revenue. But what if you don’t like watching videos and you don’t click on ads? In that case, they’ll analyze your social score — do you share a lot of content on social media? If you do, they’re going to send you Buzzfeed-style articles that play well in the social arena. If you don’t, they’re going to show you high-authority long-form content which increases time-on-page, subsequently augmenting the website’s Google page ranking.. and all of this content that they’re showing you will be tailored to your affinity profile. You can see a full keynote about this topic here.

Now let’s move onto contextualization and the power that comes with combining personalization with contextual information. Contextual information has to do with the surrounding environment; think the weather, geolocation, traffic density, or local events. In the apparel industry, Dynamic Yield analyzes a users buying history so that it knows what colors they like and the sizes they’ve previously bought. It then looks at the weather in their region to match them with items that are their size, in colors they like, that they could wear in that climate. If it’s snowing they’re not going to show their visitors bathing suits. Instead, they’re going to show them coats, warm headwear (hats, beanies, etc), and fuzzy socks. Then they’re going to look at their location — if their store is in England but you visit from America they are going to include a banner or a popup to increase conversion rates, like so:

A more interesting example of contextualization happens in the insurance sector. Dynamic Yield uses geo-locations to change their clients website backgrounds. If you visit their clients site from New York, the websites background image would be the Financial District in Lower Manhattan. However, if you visit it from Nebraska, the website background is an industrial agricultural farm and accompanied ranch from Lincoln, Nebraska. They also use weather data to promote flood insurance to tropical regions on the precipice of receiving strong winds and storms.

Then there’s the restaurant industry where we can see this powerful combination in full effect. At McDonald’s, Dynamic Yield tailors digital drive-thru menus to the weather and location-specific restaurant traffic (ie. they identify who is ordering food based on your cell phone’s proximity to the drive-through menu, and then they use your order history to tailor the menu to your liking). They also look at what menu items are trending. Once you start ordering, they modify the menu to recommend complimentary up-sell items. This all happens in real-time! They’re doing more than just changing drive-thru menu’s though. They’re also affecting in-store kiosks by using near-field communication smart poster technology to serve guests relevant advertisements. Then there’s their predictive technology which increased McDonald’s service times at the drive-thru window by nearly 30 seconds (20 seconds of which happened almost immediately after the integration). Forbes estimates that these improvements helped McDonald’s increase their average sale per customer by 25 cents — McDonald’s has around 77 million daily customers so this would mean they broke even on their $300 million investment after a mere 2 months.

The cofounders of Dynamic Yield believe strongly in the Pareto Principle, which states that 80% of consequences come from 20% of causes. They even believe that Pareto understates the case, observing that 1% of guests drive 67% of annual revenues. This means it’s really important you do not miss an opportunity when that 1% shows up. Combining contextual data with personalization data helps them capitalize on that traffic. It’s my hope that the ideas espoused in this article can get you thinking about ways in which you can also make personalization and contextualization an integral part of your business.