Engage-Digital

I see that Eric Peterson has written a nice white paper on what he refers to as ”The Coming Revolution in Web Analytics”, it can be downloaded  here. In it he talks about the future of web analytics and in particular what he calls 3rd generation web analytics.

I won’t paraphrase what he says about 3rd gen WA (really better to read the white paper) except to say that he no longer describes it as  web analytics as it starts to move into the realm of general business and customer intelligence.

Among the thoughts that occurred to me whilst reading his white paper, two stood out:

1. What he says about 3rd generation web analytics / business / customer insight at a practitioner level sounds a lot like the kind of thing econometricians have being doing for years although initially they weren’t including heavy weight web data. But the kind of modelling he talks about is already being done by econometrics units in many media and advertising agencies.
2. What he describes as being 3rd gen (web) analytics is no doubt advanced stuff but I think the problem will be uptake. I think that there will be a small cadre of trail blazers who will get heavily into all the mechanisms he outlines such as cross channel data mining, predictive modelling, confidence analysis of customer segmentation etc. but the trouble is this will be for the big guys who can afford it and even then precisely because it is complex it will probably only be taken up by organisations who have the right people in the driving seat. i.e. despite having a highly capable team of analysts and statisticians, a C level director who’s head is filled with many things may find it hard to champion this stuff unless s/he has a reasonable to good understanding of it his or herself. For the rest of the world – i.e. the majority of small and mid-sized businesses it’s still a long way off.

None of that is to say that A) Peterson isn’t correct in his overview or B) it isn’t what should happen, just that the main obstacle may be one of human resource more than technology, much as it has been up until now.

Google’s Chief Economist Hal Varian recently posted a note on the Inside AdWords blog stating that ad position on Google’s search results does not affect on site conversion. This may not be supprising given that the comparison is made using the same ad on the same search results page clicking through to the same site, the only difference being psition.

Varian acknowledged the widley known fact that a higher position does however yield more clicks. Google positions ads based on bid price and quality so better quality ads and higher bid prices will result in better positioning, more clickthroughs and ultimately more conversions, but the on site conversion rate will most likely be the same or similar compared with ads that appear lower down.

Does this insight affect PPC strategy?

It depends. PPC doesn’t just have to be about clickthrough rates and conversion rates. Volume and cost of aquisition / margin also come into the equation. A lower bid on a high quality add will probably drop it down the pecking order restuling in fewer clicks and few conversions but because the bid price is lower the cost of sale will also go down and margins will go up. However gross sales and revene will suffer.

A higher bid on a high quality ad will have the opposite effect with gross sales and revenue going up but at a greater cost which in turn may reduce overall profitability. Equally, money saved by bidding low could be siphoned off into other strategies such as SEO which in the longer run could yield both high volume at a lower cost.

Today we have more choice than ever before. More choice in almost anything we can think of to consume and this is generally regarded as a good thing.

I’m of an age in which my parents were alive during the Second World War and they remember rationing and less choice. The mantra in the UK at that time was “mend and make do”, something that has been dusted off recently as we all struggle with the harshest economic climate since the First World War. Back then being paralysed by choice wasn’t an issue.

The web has had a very significant impact on the level of choice over the last 15 years or so. We have more choice than we know what to do with across such huge range of areas from the media we consume, to the way we search for places to live and holidays to go on, entertainment and means of communicating with other people.

Given the human imagination it would be fair to assume that our capacity to absorb choice would be almost unlimited; they say “if you can think it, it’s probably been done”. Amend that to “if you can think it, it’s probably been done and you can find out about it on the web”. As a group the human capacity for choice is practically unlimited but individually, I think not.

So Google has played a key role in all of this. It’s mission statement being to.. “organize the world’s information and make it universally accessible and useful”. Whether it’s organised it or not is another matter but it has certainly made it much more accessible.

What it means for the retailer

Dial that back now and consider the much smaller universe of an online store. One of the benefits of ecommerce is the lower costs of doing business. These come about as a result of lower overheads due to stock being held in cheap warehouses in business parks and on trading estates instead of held on more expensive shop floors. That also means there’s a lot more space available – Amazon’s warehouses are enormous – and that in turn means a huge selection of stock that can be sold through the online store. So we come back to ever increasing choice for the consumer and how to wade through it especially if you’re shopping online.

What it means for the punter

The fact is, if you’ve decided take up running you’ll probably want a pair of running shoes but if you arrive in an online store and you’re presented with a choice of over 200 different pairs of shoes, being faced with such a huge range may actually be more of a hindrance than a help; back to the paralyzing  tyranny of choice. The end result for the retailer being a no sale situation.

Just as Google has tried to do with the world’s information the key for the retailer is to organise and make stock more easily accessible. More than anything else this will help the customer, more than beautiful product shots,  clever copy or fancy widgets and tools, if a customer can’t find what s/he’s looking for and narrow it down to a manageable choice then there is no deal.

What it means for the website’s store developer

Success means that navigation and organization are co-dependent. Tools like Omniture’s Merchandising, Fredhopper, Endecca or Celebros will all help with both organisation and narrowing down the product search through the mechanisms of both free text search and more importantly guided navigation but there is still the most important job to be done of categorising and tagging products so they can be easily filtered by the customer using these tools.

The point here is not at all about the technology but about the need to create a framework which will do as much of the decision making for the customer as possible with the end result that the final decision, the one to buy, is as simple and straight forward as can be.

With all the usability, analytics, survey, heat mapping tools and many others that are now available for the web analyst to draw on, you’d think it has become almost a matter of form that any questions related to the online shopping process can be answered and that the customer’s decision making process can be exposed but in fact it seems that customers don’t necessarily themselves understand the mechanisms by which they make decisions.

Dan Ariely, a professor at Duke University has done research into what he calls predictably irrational decision making and in his book (Predictably Irrational) he presents an example involving the subscription pricing for The Economist newspaper.

In the example The Economist newspaper offered 3 subscription options:

1. Print plus online for $125
2. Print only for $125 (no, not a typo)
3. Online only sub for $59

This was either a mistake by The Economist or a stroke of genius. Ariely presented this offer as part of an experiment to one set of students and then to another set of students with a modified offer in which he removed the middle option.

The upshot was that when the first set of students were presented with all 3 options the majority chose option 1. When option 2 was removed and the remaining two options were shown to the second set of students the majority chose option 3.

Ariely uses this to demonstrate seemingly irrational decision making but he goes on to explain the principle that option 2 while appearing to be useless and of no value (to the potential customer), in fact had value to The Economist insofar that it’s presence gave the impression that option 1 was really very good value. By removing option 2, the perceived value of option 1 was no longer apparent so people went for the cheaper option.

This has some pretty interesting implications for how product pricing can be displayed and more interestingly how up-sell can be achieved.

In the current trading environment shoppers are more likely than usual to be looking for a good deal. That generally means either cheap or good value and the two aren’t necessarily the same. Being cheaper than the next guy might have more to do with the supply chain and the deals that can be struck by the merchant with his / her suppliers, but demonstrating good value when your offering is not the cheapest on the market can be a pretty tall order.

Ariely refers to the middle option as a decoy but a conjuror or a lawyer might refer to it as simple misdirection. The point is to demonstrate value by creating a benchmark that is close enough but which the customer is easily able to discount in favour of the real offer.

Increasing average order value is hard but with this kind of understanding and a content management system and pricing structure that is flexible enough it is possible.

E-D talks to Amanda Davie, MD of Boolian Ltd and member of the cScape Customer Engagement Unit

1. What is Bing?

Bing is the new name for Microsoft’s search engine. We’re talking largely about a re-brand (from Live Search previously). My guess is that Microsoft felt that a new brand was required – something that sounded more ‘funky’ and independent to the Microsoft the Live brands. Microsoft are going to be ploughing a lot of money into this new branding and consumer marketing to try and get Internet users to give Bing a try, because so far its search technology alone hasn’t managed to entice many people away from Google.

2. What’s so special about Bing?

What sits behind Bing in terms of its capabilities is the culmination of the last few years of Microsoft investing very heavily in their search product. But rather than trying to compete directly with Google in terms of ‘the Google formula’ Microsoft have sought to understand semantic search, search behaviour, and are trying to return the kinds of results that you would want for different kinds of vertical searches. Rather than have the same format and formula for every kind of result, as Google generally does. Microsoft is incorporating more answers in its search results. For example, search for “weather forecast London” on Bing, and you get the weather forecast for the next few days. I know that Google can do this kind of thing too, but Microsoft lay it out more nicely, using more imagery and icons. Some of the vertical search pillars that Microsoft have really focused on in terms of R&D, over the last few years, are image search, entertainment search, map search (through its acquisition of Multimap) and shopping search. So try some related searches to these verticals, and you might be pleasantly surprised!

3. And what about that left hand column listing related searches?

The related results on the left – again, Google do these too now, but Google put them at the bottom of the page. This is what we in the industry refer to as semantic search results i.e. trying to suggest common or relevant themes to the individual words or phrases that people might type in. Recognising that people don’t always say – or type – what they mean! For example, a search for “windows” could signify a need for a Microsoft product, a window cleaner or new double glazing.

4. Will the “related search” results present new challenges for SEO specialists?

I think it’s probably fair to say that most SEO specialists still tackle keyword/phrase targeting in the same way as they’ve done since the mid-90s – and it’s not particularly sophisticated. These techniques don’t yet necessarily allow for an in-depth understanding of semantic search language. But yes, it does present a big challenge because we (search and digital marketers) will need to get a lot closer to the behaviour and language of the searcher, and look beyond the keywords in terms of understanding what relevant themes we need to develop and optimise our web content around.

5. How do you think language pathways will help with SEO for the semantic web?

The Online Language Pathways (commissioned by CDA) research identifies that web users use different language during their search journeys – from their original language of intent, through their online search, to engaging with the websites that they choose to visit. We also tailor and filter our online language according to what we think will work best when searching, and also we adapt our language to the brand messaging that we see in the search results and again on the destination content. Understanding the semantics of search and indeed of the broader web has to be a key planning principle for search marketers moving forwards. It’s simply not enough to analyse keywords anymore; we have to understand the meaning behind the words – the language of intent.