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The Right Way to Compare Web Advertisements

Posted by Paul Christ March 18, 2010

Statistical Significance: Not Just For Geeks Anymore (Search Engine Land)

One of the true tests of what works in marketing is to use quantitative measurement methods to compare what happens when changes are made.  As an example, a company may test two different types of incentive plans with its sales force.  Calculating the results of these plans could help the company select the plan that leads to higher sales.

Comparative analysis is most widely utilized in advertising testing, especially online advertising.  With the immense amount of data available to those engaged in Internet advertising, comparing what works and what does not can simply be a matter of looking at the numbers.  Many companies do exactly that by employing so called A/B testing where effectiveness of one ad is compared to another (see MarketingExperiments for more on A/B testing).  Measures of effectiveness include click-through-rates, purchases or other user action.

Yet many marketers responsible for online advertising often do not take a deep look at whether the results truly represent a difference, at least not in a statistical way.  This story outlines what it takes for comparison of two ads to be statistically significant and paints a nice picture of how results can be misinterpreted.  It also suggests that certain tools available on the Internet to measure statistical significance may not be quite accurate.

Though the concepts I’ve described above are (hopefully) now very clear, unfortunately, some of the web-based tools for differentiating CTRs seem to have disregarded them completely.

Note: In the Comments area of this story there is a posting discussing a neat online statistical tool for evaluating A/B testing that may, in fact, addressed the problems raised by the author of this story.

Even if a marketer follows the advice presented in this story, what other issues need to be considered before the marketer makes a final decision on which advertisements are best?

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Small Business and Social Networks Are Yet to Be a Match

Posted by Paul Christ March 16, 2010

Entrepreneurs Question Value of Social Media (Wall Street Journal)

It is virtually impossible to escape the hype surrounding social network websites (a.k.a., social media).  The buzz regarding social networks is so strong that all types of businesses are now seriously considering whether they MUST start incorporating it into how they do business.  In particular, businesses are wondering how social networks can be utilized as part of their marketing strategy.  They have heard about the success some companies have had with marketing through social networks and think the time is now right to jump in with both feet.

Yet, for many small business owners their initial experience with marketing through social networks has not gone well.  As pointed out in this story, many entrepreneurs are in the dark when it comes to understanding how social networks can be used to meet their marketing objectives.  And because of this experience they are questioning whether Facebook, Twitter, MySpace and other services are all talk and no action when it comes to being a valuable marketing tool.

Meanwhile, a separate survey of 500 U.S. small-business owners from the same sponsors found that just 22% made a profit last year from promoting their firms on social media, while 53% said they broke even. What's more, 19% said they actually lost money due to their social-media initiatives.

In addition to what is discussed in this story, what other factors affect whether marketing through social networks is something a small business should consider?

Image by KateMonkey

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To Regain Importance MySpace Tries a Repositioning Strategy

Posted by Paul Christ March 11, 2010

Once-Fading MySpace Focuses on Youthful Reincarnation (USA Today)

Five years ago MySpace ruled the social media world.  It was considered the darling of Internet startups and eventually was purchased by News Corp. for nearly $600 million.  But like many fast growing companies, MySpace tried to be everything to too many people.  Trying to appeal to many, diverse market segments with what amounts to being the same product is often difficult unless the product is a true commodity (e.g., milk) that nearly everyone wants.  Unfortunately for MySpace, customers in the social media market were not looking for the same product; they wanted a product that was customizable to their own styles.  MySpace's limited offerings opened the door for other social network sites especially Facebook, which by 2007 surpassed MySpace in web traffic and today is far ahead.

As this story discusses, MySpace is now being forced to reposition itself.  It is altering its marketing strategy and taking a more targeted approach.  By narrowing their focus the company hopes to appeal to the under 35-year-old market, with even more emphasis on the under 25-year-old crowd.  The changes in marketing strategy include a new website design, online gaming, new content and renewed emphasis on music and movies.

More than half of MySpace's estimated 100 million users are 25 and younger, according to market researcher ComScore. The 13-to-34-year-old demographic spends 84% of all user time on the service. MySpace intends to appeal to that demographic with a mantra of "Discover and be discovered," a fancy way of saying it wants to be the online venue to find new friends, movie trailers, little-known bands and social games.

In addition to the changes noted in this story, what else will MySpace need to do to once again gain traction in the social network space?

Image by MySpace

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