Personalized Advertising in E-Commerce: Using Clickstream Data to Target High-Value Customers

Abstract

The growing popularity of e-commerce has prompted researchers to take a greater interest in deeper understanding online shopping behavior, consumer interest patterns, and the effectiveness of advertising campaigns. This paper presents a fresh approach for targeting high-value e-shop clients by utilizing clickstream data. We propose the new algorithm to measure customer engagement and recognizing high-value customers. Clickstream data is employed in the algorithm to compute a Customer Merit (CM) index that measures the customer’s level of engagement and anticipates their purchase intent. The CM index is evaluated dynamically by the algorithm, examining the customer’s activity level, efficiency in selecting items, and time spent in browsing. It combines tracking customers browsing and purchasing behaviors with other relevant factors: time spent on the website and frequency of visits to e-shops. This strategy proves highly beneficial for e-commerce enterprises, enabling them to pinpoint potential buyers and design targeted advertising campaigns exclusively for high-value customers of e-shops. It allows not only boosts e-shop sales but also minimizes advertising expenses effectively. The proposed method was tested on actual clickstream data from two e-commerce websites and showed that the personalized advertising campaign outperformed the non-personalized campaign in terms of click-through and conversion rate. In general, the findings suggest, that personalized advertising scenarios can be a useful tool for boosting e-commerce sales and reduce advertising cost. By utilizing clickstream data and adopting a targeted approach, e-commerce businesses can attract and retain high-value customers, leading to higher revenue and profitability.