experimental marketing:crucial component of a success
DESCRIPTION
Andrey Sebrant presentation at digital marketing conference DMX Austria 2011, Vienna, April 2011TRANSCRIPT
Wien, April 2011
Experimental marketing:
crucial component of a success
Andrey Sebrant,
Director, Product marketing
A few facts about Yandex
· Over 50 million users a month, around 15 million a day
· Over 100 million search queries a day
· Over 64% of search traffic in Russia
· Over 3 000 employees in 10 offices across four countries
· Over $400 million in revenues last year
2
Local players are strong in some markets
Sources:
1. LiveInternet.ru (Feb 2011)
2. Analysys International (Jan 2011)
3. SearchEngineWatch.com (May 2010) 4. Vyhledavace.chose.cz
(Nov 2010)
Russia (1997) China (2000) South Korea (1999) Czech Republic (1996)
SEARCH MARKET SHARE:
Other
3
65%
22%14%
Russia’s leading search engine
RUSSIAN SEARCH TRAFFIC MARKET SHARE, %
Sources: LiveInternet.ru (through Feb 28, 2011)
1. Based on monthly search traffic to Russian websites from Russian IP addresses
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Sep/
05
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Mar/0
6
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Mar/0
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Mar/1
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10
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Dec/1
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YandexRamblerSearch Mail.ruGoogle
On a fast growing market
Sources: LiveInternet.ru (through Feb 28, 2011)
1. Based on monthly search traffic to Russian websites from Russian IP addresses
RUSSIAN SEARCH TRAFFIC
5
Sep-
05
Dec-0
5
Mar-0
6
Jun-
06
Sep-
06
Dec-0
6
Mar-0
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Jun-
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YandexGoogleSearch.Mail.ruRambler
A very competitive environmentWhat we rely on:
· Dream team
· Big math
· Computing super power
Last but not least: a very efficient marketing
6
“Digital” means a lot
· Of course we operate in a digital media, communicate through digital channels
· We collect so many data that the entire marketing becomes digital in its core
7
It takes many skills to be a pilot, much more than just ability to read devices.
On the other hand, if you don’t know how to read them, the landing may be too hard.
Marketing is an experimental quantitative science
· We study the world (people, products and markets)by creating models and testing them in experiments
· Models are based on already known facts, observations, intuition and fantasy
· Experiments or tests are carried out using standard scientific methods
Marketing studies happiness of users and customers. We have to predict what makes them happy even if they do not realize where
the happiness is.
8
Product is the king
On the Net this is true as nowhere else:
- everything is free- all competitors are a few clicks away
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Case study: Churn rate
· Loss of users may look scary
· Don’t panic! Analyse this
· It turns out that users are similar to isotopes; they decay like in nuclear physics
1 2 3 4 5 6 710000
60000
110000
160000
210000
260000
310000
360000
Number of users registered during week 1 and visiting the service
at least once during each next week
1 2 3 4 5 6 710000
100000
1000000
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1 2 3 4 5 6 7 8 9 1010000
100000
1000000
f(x) = 59124.6973627865 exp( − 0.0601795024074681 x )
f(x) = 1266549.80801432 exp( − 1.34140485938932 x )
More about radioactive decay
· The same percent of users quit service every week
· Decay rate is characterized by half life, the time taken to decrease the initial amount of users by half
· If the process is described by the sum of two exponents, there are two groups of users with different half lives
In many practical cases the churn rate curve is the sum of two
exponential decay curves
11
Translation from mathematics to marketing
Two groups mean not two isotopes in our case:we observe loyal (long half live) and casual (short living) users
Thus, we get quantitative metrics for loyalty which we can measure at the early stages of a new (or re-launched) service.
Why is this so important?
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Real-time obsession makes us blind to long-term effects
· The internet is too fast
· We all are obsessed with instantaneous measurements- «At the focus group they say…»- «usability tests show…»- CTR is dropping!…
And we often forget about life-long relationships with and love of our users ;)
13
Churn rate is a good metric for evaluation interface changes or comparing advertizing channels
You can measure the effect of interface updates on users’ loyalty. Ideally, the new interface should be tested on a small percent of users.
Control group: new users registered in the old interface
Test group: new users registered in the new interface
Metrics to monitor: ratio of percent of loyal users, ratio of half lives
And then you can predict the future!
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0
5000
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20000
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Churn rate and the budgets (usability vs. advertising)
Too much of the ad budgets are a waste
Loyal attracted = 5%,
Half life = 3
Ad campaign Most advertising campaigns are too far from the
ideal, because they mostly attract casual users
and very few loyal onesLoyal attracted = 100%,
Half life is eternity
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No math, just common sense
Before pouring expensive usersinto the website,
plug the holes!
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But if you like math…
Site audience in a month n depends on the audience
of the previous month:
NCAA nn )1()1()(
($)newnat FNN )1;0(
($);
c
cmaх
G
GCC
New users come on their own and thanks to
promotion activities:
Decrease in churn rate costs money. But
usually it’s one-time expense:
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Enter the segmentation
· Different groups of users
· Different ads
· Different sources of new users
Test and measure responses in each group,test and measure efficiency of every source and ad
And think it all over!
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This still is the most important tool for a marketeer
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Not only digital things matter
Thank you!Спасибо за внимание
Andrey Sebrante-mail: [email protected]: @asebrantFB: www.facebook.com/asebrant