MIT has published a great paper, if a little technical, on using visitor focussed content and how to apply customised content to differing personality types. The authors had tried out this approach with a test on one section of the BT Broadband site and had come up with a “20% increased propensity to purchase” and valued this at $80m for this client alone.
Nice reading and kind of validates that we are doing with VITES.
I saw a great post on Digital Design Blog from Tim Barnes at Razorfish | Avenue A. It really is worth a read and about half way through it I had a real double-take moment…..Tim is describing exactly what VITES/Passport Server does. It’s a bit of a shock and a cool feeling to see huge wheels in the big players identify a big opportunity that we have plugged! Just a shame that he didn’t make mention of little ol’ Connected. Anyway, thanks Tim, I owe you a beer.
As most of us know, the cost of advertising online is generally going up. We also know that different modes of advertising generate different conversion rates. We also know that demographics can form a significant element in conversion rates. It’s all rather depressing really; we all looked for transparency and a complete understanding of our advertising streams in this new Internet world but, in reality, it is just not happening in a useful way.
Problem Case Study
We have a client who pays a maximum “cap” on his advertising contract with a major advertising network. The overall spend is pretty substantial and runs to a few million per annum. He is facing increasing pressure on advertising budgets as his “cost per acquisition” is starting to spiral. With the advertising network placing millions of adverts in a blind network, you have to think that there are ways to improve the overall performance; one such way is matching the demographics of the sites used with the ideal demographics of the client. This is a good idea, except that demographics are not that accurate and, in our example case, the client gets over 20% of his business from the “unfavourable” 1/3 of the demographics. By cutting out these “undesirables” he would potentially see a 20% drop in turnover. But then again, these undesirables cost over 3 times as much to convert to customers than the desirables. So, how do you solve this problem?
Lets just break open this can of worms and see what the challenges are:
1. The client uses a blind network to advertise on, and can put a “stop” on poorly performing sites. This would drive down the overall cost of the advertising, the average cost of sale (whatever that means in this context) AND the total sales. So, 2 good things and 1 very bad thing.
2. The client has the problem that 20% of his sales come from undesirables and these cost 3 times as much to convert as desirables. Is this because 2/3rd of this sector are wasters or is it simply a case of requiring a far higher level of investment to get them to become customers?
3. The increasing cost of acquiring undesirables is making it almost impossible to increase the advertising budget to the desirables.
4. Their website converts at a staggeringly good rate (over 10%). Is this high conversion rate needlessly driving up the cost of conversion by having to pay for more undesirables?
5. The client has a Cost Per Acquisition contract with the agency and this contract gives a (broadly) fixed rate of acquisition, regardless of subsequent conversion into sales.
Hopefully you can see the dilemma here. But there are 2 alternative solutions to this:
1. Move the agency contract from CPA to CPS (cost per sale) - this drives the agency to generate not acquisitions but actual sales. This is, classically, a good solution as the agency is then driving at the same end-goal as the client but it has its own set of problems. Shifting the risk of converting acquisitions from the agency to the client means the agency will require a greater return on the investment. It also means that the agency has 100% visibility of the success of the client and therefore needs to be an integral partner and not a supplier; not every agency or client is comfortable with that level of collaboration and it can be potentially open to some “over selling”. It’s a difficult track to walk down but for most clients this is the only option open to them.
2. Provide a different experience for differing traffic streams. In other words make acquisition a far simpler task for visitors that match the demographics and a far tougher task for those that don’t. This gives you the best of both worlds. If a “perfect” visitor arrives at the site it becomes incredibly simple for them to be pushed through the process because a) they are more likely to respond to the sales messages do so and b) they have a far better chance of converting to a sale and so offer greater value to the client. If an “imperfect” visitor arrives at the site the acquisition process is more long-winded so it weeds out the “less than motivated” and also ensures that when the acquisition process is complete the client knows a great deal more about them so can better target the sales messages used in the future.
Makes sense? I thought so. We are going to try this with two clients who spend in excess of £5m on online advertising.
As an aside (sort of), Acorn provide an embedded web-service that could pull one of 50 or so demographic types that exist (according to them) in UK. All you would need is the postcode so for site visitors you know little about can suddenly be seen in a wonderful techicolour clarity on the acquisition of a postcode. We’ll be trying this out as well.
As organisations become ever more fleet of foot it becomes clear that the “old world” approach of making huge, long range policy decisions is no longer appropriate. For some time now I have been advocating a “test, test and test again” approach mixed in with a quasi-Kaizen methodology when it comes to improving the performance of websites. This is borne out of being able to have a complete view of what happens when we make changes to a site (thanks to our VITES™ platform); when combined with statistically correct sample sizes and A/B testing, this gives you the clearest (probable) indicator of how successful a change is.
I note that a search on Google turns up some interesting results, with some companies, such as Nike, embracing the idea, and no less than Forbes Magazine citing it as the reason for the wealth of creativity that comes out of our US cousins across the pond. Thomas Edison was once quoted as saying “I HAVE not failed. I have just found 10,000 ways that won’t work.” This approach has its problems which need to be addressed, but the greatest problem is with its name- Trial and ***ERROR*** - which states clearly that mistakes will be made. Sadly most of today’s inwardly-focussed corporates seem to lack the courage to take this step. Even worse are the companies that make sweeping changes without trialling them first; in the case of AOL a $75m loss in revenue.
The companies that do test fly; the ones that don’t end up stagnating and die.
The moral?
To succeed you have to fail occasionally 
It that so unusual? It’s probably rather dependent on whether I go in there a lot, which I don’t. He does, however, know quite a lot about me and stores it away in his memory. From what he said to me he knows:-
1. My favourite drink is Guinness and that’s pretty much all I drink
2. He knows I go on the train to London a lot as I will pop in for a pint on my walk back from the train station
3. He knows I smoke as I have to go outside and will leave my money on the bar whilst he’s pouring my Guinness
4. He knows I am male
Ok, so why the irreverent twitter about my local pub? Well, I was thinking that my company builds websites that learn about its visitors by their behaviour and was this a violation of privacy? The answer is “no”. The local barman sees me coming though the door and sometimes has a pint on the go, he says “hello” and if I’m in a suit and it’s around the time that the London train gets in he will ask if I had a good day in London. What he is doing is improving my experience, he’s treating me personally even though he doesn’t know my name - in fact sharing my name would seem wrong and too personal.
So why aren’t more websites like that? They should learn what I like and slant the content towards my interests. YouTube doesn’t do it; it only shows the most popular and latest videos of the day, which I hardly ever watch, so why waste my time downloading the content on that page - take a leaf out of Google’s book and just show the search bar.
More sites will certainly start to work this way and our new VITES platform certainly lets companies do that - it’s just a matter of time before it becomes the standard way to operate.
My company is re-building the web-site for Ultralase at the moment, we are lucky as they are a pretty brave company and leave us to pretty much run their whole Internet strategy and as a result they are the dominant force in their marketplace. That’s nice, but recently I have wondered what it would be like if we had to explain to them everything we did. It would be damn near impossible to value it, sure we keep timesheets for programming and project management but so much of what we bring is measured in cleverness but not in the huge ideas. We had that huge idea (VITES) back in 2003! No, this is about the small, tiny, clever ideas we come up with day to day - our leading clever-idea bloke is John Hyde who has just immigrated to New Zealand. John will carry on working for us when he settles there but for the moment I am back in the harness working on these ideas and I came up with a corker today, a simple you have UNREAD mail link that appears on the web-site to all returning visitors who have not left any personal details yet.
Simple, yup! When it was tested in the office everyone said they would click on the link out of (either) curiosity or simple conditioning. We are used to seeing those 3 (4 in this case, it makes is more compelling) little words at places we stop at frequently. So, we’ve made a (as yet) unresponsive visitor click a link we wanted them to click…anything else whilst we are at it? How about a login/register screen….
Please enter your email address and password to retrieve your message(s)
Email [ ]
Password [ ]
Excellent, we have a way to let someone register and login at the same time and, for a bonus, we get his/her email address and we have closed the relationship gap slightly as they are now part of the family, they have opted-in to our love-generator!
I’ll keep you posted on the outcome - behavioural and conditioning are wonderful on the web and with the ever-changing landscape it should prove to keep us all on our toes.
When Blogging falls down
I heard a colleague the other day talk about the rise of corporate blogs that are nothing more than thinly veiled attempts at selling or pushing products and ideas. This is bad, but I maintain a blog and it is done with the commercial intention to attract interest in my company, its platform (VITES), services and surrounding products. So how can Flog (flogging-based blogs) exists in the same space?
Well, I thought it was nothing as simple as the aim - it is the tone, the intention. I am honest about what we do and how we do it and I have been blogging on and off since 2003 so I kind of grew up with it.
I do hope that some of the big boys get it wrong and fall flat on their face as they hide behind blogs and pretend they are trying to widen consumer understanding or “handing their brand over to the common man” - it’s all tosh and the agency world is still struggling to work out how to leverage this new communication medium.
I love this open world, it rocks
