I have known a lot of companies that spend a tremendous amount of time on their analytics. They tweak their tags, they build custom dashboards, they set up automated reporting, and they have business analysts doing studies in the data on a regular basis to find interesting insights. This is all as it should be. The first rule of analytics is that it doesn’t do you any good unless you study it and share it.

However, it is always odd to me when I see a company that has found some very compelling insights in their analytics but they have yet to act on it. They may have even done a study to estimate how much money they could be making if they just improved a particular top entry page’s bounce rate, for example, and it could be worth millions in incremental revenue to them to decrease that bounce rate. But months later, they have yet to realize those gains because they didn’t know where to go from there. As a result it can sometimes seem that they are not yet earning the first dollar of ROI on all that effort and expense to do the analysis. That is, until they take action. And if you never take action on your analysis then it may have been interesting, but largely academic. That is what testing and targeting are for – to help you actually earn your ROI, not just forecast it and document it.

I do this all the time on my own website with the Omniture Suite, and I never cease to be amazed at how simple it can be to take action that drives real results fast. In my years at Omniture, and when I was an Omniture customer, I’ve led many initiatives involving analytics, testing, and targeting. So from this experience, I wanted to share the first in my multi-part series called “When to Test and When to Target.” We’ll start with the first item in The 5 Times When You Want to Test.

1. Landing Page Optimization – when you need to optimize beyond the click.

For many years companies have been spending a lot of money on advertising to drive visitors to their websites, but comparatively under-investing to convert that traffic once it arrives at the site.

I know a large business that as recently as last year was spending almost $100MM of their advertising budget in PPC search campaigns. It’s fair to say that they were only spending maybe 0.2% of that to optimize the keywords’ landing page experiences after the clickthrough. I don’t want to make it sound like it has to be a 50/50 split between ad spend and optimization efforts – that’s probably unrealistic. But $500/$2 ratio is quite lopsided toward the ‘spend side’ regardless of who you speak to.

One quote that has always stuck with me comes from a Wunderman executive who “gets it.” He said the following:

“We preach that clients today should be setting aside 15% of their spend for optimization. We believe that the opportunity to improve the performance of the other 85% is that significant, and well worth it.” – Mark Taylor, Wunderman, EVP and CIO

This means that if you have an advertising budget of $500k for a particular “new product release” campaign, you normally might engage your agency to build a flash microsite to capture leads, as well as a couple of different sizes of display banners to put out on publisher sites. Then point them all to the microsite. But if you are looking to maximize the number of leads you get out of this new campaign, you might do the following instead: Ask your agency to use their creative minds to come up with 3 vastly different approaches to the microsite, depending on differing theories they have of what might drive conversion. Then have them do multiple alternative creative approaches to the display ads. Spend the first 15% of your budget to run some tests to find out which combination of ad+microsite is the best performer. It’s the Darwinian concept of letting the first visitors succeed and fail to discover what works and what doesn’t. Because who’s to say that the first microsite idea the agency came up with is going to be the highest-converting idea? Once you know the best performer, push the rest of your ad spend to that experience. At least now you’ve found the least-leaky bucket before turning the water on full volume.

Returning to the business that spends $100MM on paid search…. The fact of the matter is, in today’s economic climate the VP of Advertising may have his acquisition budget hacked in half. He can’t spend nearly as much just to shove traffic at the site. But, of course, the VP of the .com is probably still held to her same revenue targets from last year. The only logical way for the CMO to make this work is to squeeze much more juice out of the traffic that DOES come to the site. And the way to do that is to constantly be running optimization campaigns on your landing pages. Some of you may be thinking, “That’s great stuff…I wish we could achieve it. But we’re just trying to survive this year.” That’s true – and landing page optimization is your marketing department’s life raft.

Tune in next time when we’ll discuss the second situation when you should test….

-Brig Graff

3 comments
victor
victor

This short article is very well put together. Mr. Graff's intelligence precedes his knowladge and reputation in SEO & SEM.

Brig Graff
Brig Graff

Thanks Reuben --- in situations where you don't have campaign spend that you are optimizing, then I think the question is how much traffic to split off to the alternatives before calling a winner, since that was the intent of Mr. Taylor's comment on proportion to spend on optimization efforts before rolling out the entire campaign spend. In the case of traffic, you can roll out a test to however small a group you want ----- just realize that if you only have 1,000 visitors per week coming to the page you're going to optimize, and you try out 4 alternatives of that page (3 plus a control), then even if you roll out to 100% of visitors you'll only get 250 visitors into each experience. This means that it could take a long time before statistical significance reaches a high enough level to crown one recipe the winner. As far as how much of your operational budget for marketing you should allocate to employees & expenses related to optimization efforts, that is a separate blog post series in itself! :-)

Reuben Poon
Reuben Poon

Great article. I'm looking forward to the rest of your series. I like how you included a guideline or frame of reference when budgeting out ~15% spend for optimization. What about companies without a budget or no budget? I've been pondering this question. What if a company were to make successive improvements with the guide that 50-100% of the increase they see they redirect into optimization efforts? Process might be slow at first but you would essentially be funding your own success and after time be self-sufficient and able to initiate other efforts as well.