Jonathan Mendez's Blog

What Social Check-Ins Forgot: The Value of Landing Pages

I have yet to become a fan or user of social/location based check-in services though I am a fan of the beaconing strategy they employ. As I’ve written before, value creation on the web involves more than a one-to-one exchange of value. A trifecta of goal fulfillment between your product or service, your audience and a third party (advertiser, restaurant, etc.) is required to create value. This is where these services fall short for me and thanks to recent tweets from my friend and SEO guru Natasha Robinson I’ve finally realized why.

As Natasha says, the check-in links syndicated through social media verge on unclickable. The reason is rather simple. The landing pages provide no value to the referrer. Yet, the landing page is the spot where the triangulation of goals must align. The whole value chain for this product converges at the landing page.

While we can clearly see the potential of these services to provide tangible value to the establishment where check-ins occur and some (for now less tangible) value to the Mayor McCheeses and people doing the check-in, I would argue that the service only works if there is strong value being created in the stream. Without this newfangled linkbait, the fish ain’t gonna bite.

Let’s take a look at each of the content areas on Foursquare’s landing page and see what is and isn’t working for a referrer and the value triumvirate as a whole.

  

1) As a referrer I already know from my stream the name of the establishment. I already know that the person that has checked in here. There is huge immediately actionable value for the establishment though. Many locations would benefit from an announcement categorizing everyone who entered it. Of course that can provide parallel value to the person checking in.

2) The amount of check-ins and visitors does not really tell me much, especially for a new service that is building scale -- it’s very difficult for a naïve user to asses this value. Again, most of this value rests for the establishment.

3) The images of the Mayorship and the people who’ve been here have negligible transactional value to anyone.

4) Maybe most interesting for a location based service the map has very little value. In most cases the address above is sufficient information for a referrer at the moment of landing. The establishment and check-in already know where they are.

5) Tips can be helpful but their value is tied to a small segment of temporal traffic (the moment or prior to check-in). While this value is highly dynamic tips have the most shared value among troika of user, establishment and audience.

6) Tags are fairly generic. They likely provide the most value to Foursquare to provide classifications however it doesn’t appear that many users are adding tags. Also it appears there are some negative aspects to user tagging that can affect the value chain.

So the question remains, and of course has become heightened with Yelp adding a location based feature to its service last week and others soon to enter the fray, what improvements can Foursquare and other services make to encourage CTR on their linkbait and then create value from all from those visitors. That’s a rather big question so I’ll just tackle it form the referrer perspective.

As a landing page the primary success metric needs to be converting visitors to register for the service. As the product grows there are many more success metrics that can add value for optimization (e.g. new visitors to location pages that eventually check-in). For existing users there are also important metrics to optimize on against bounce rate/use. What good is a notification service if those notified don't take action?

As mentioned in the dissection above there is nothing on this page that is persuasive and inexplicably there is not a call to action. Is this a game? Then tell me what makes it fun or challenging. Is this a place to make plans? Then what are the tools that make that helpful and easy. Why do I want to use this service? What are the benefits to me? Until the answers to those questions are obvious landing on this page has no value for a referrer and products like this are missing a golden opportunity that may be as temporal as the very content they distribute.

Digital Spaces That Excite Me for 2010

Last year I was very fortunate to meet some incredible people involved in shaping the future of digital media. I enjoyed learning about what interests them, hearing their points of view and discovering what problems they were working on solving. Needless to say, digital media evolves at an astounding velocity so I thought this was a good moment to take a personal snapshot and share it with you. In no particular order, the areas of digital media & advertising that I’m most excited and interested in right now.

NWA – Numbers with Answers: There was incredible amount of M&A consolidation in the world of web analytics from 2003-2006. The result over the past few years has been a dark period with little innovation. The basic data retrieval systems, log-files, .js and packet sniffing have been in place a very long time yet the reporting output of these systems has not progressed much. Making matters worse many C-level execs, creative agencies and digital verticals do not trust analytics (newspaper sites reported not believing Omniture/Google Analytics data in the 9/09 ITZ Publishing survey). The bottom line is this: insights and actions are just too hard to cull. Presenting the data in more interesting ways has become vogue but this is not the answer. Legacy analytics solutions are asking (in the best case) old questions and (in the worst case) wrong questions. I sense that not only the questions but more importantly the answers will begin to change in 2010.

China - The Supernova Market: The Search and Display advertising opportunity in China has never been better. It will continue to gain velocity over the entire decade. There are 350 million Chinese on the Internet (vs. 200mm US).  Half of them are under the age of 25. Almost all of them (94%) are on broadband. That colossal user number...it is only a 25% penetration rate (vs. 72% US). Commercial web transactions are now starting to shoot through the roof.  There are some incredibly exciting web companies emerging from China and some really interesting US start-ups that are co-located in China. In 2010 I plan on being much more active in understanding this market and looking for opportunities in it. In fact, I’ve started already. It is simply shortsighted strategy not to.

Testing Reaches Critical Mass:  In the two years since I left Offermatica/Omniture I’ve been approached by about twenty start-ups in the testing and targeting space. Some of those companies have launched already and a good number more will emerge over the next year. This makes sense because two things have happened in the market. 1) Similar to Analytics, almost all the major players have been acquired leaving a void of innovation; 2) More marketers (especially mid-sized) understand the need to focus on post-click optimization. It seems pretty clear that this space will undergo a renaissance beginning in 2010 with a focus on lighter, faster and more simple solutions. I’m excited to continue having a role in the evolution of the testing & optimization space both on this blog and in my advisory capacity with a couple of emergent players including Performable.

Local Zooms In: This could just as easily been a blurb about the Facebook-Google war that has been going on now for over a year. Clearly Google has stepped up its game – its local pages have never been better and the UGC continues to increase in volume and curatical efficiency. I see this battle as critical to Facebook’s future. Yes I know how big they are and their growth rate, but their RPV (revenue-per-visitor) is incredibly low. They can’t sustain their business as a voyeuristic photo site for many more years. The key to their success is tied in developing local business pages attached to social graphs with the requisite search advertising capability. One of these two companies will crack this nut to the tune of $20B of incremental revenue over the next few years and $100B by the end of the decade. We’ve always known local is the Holy Grail. My bet is on Google because at the core all this local stuff is search, but it will be fascinating to watch this play out over the year.

New Display Formats: Without a doubt display advertising performance suffers from standardized sizes. The IAB has eighteen standard sizes for display ads yet 90% of ads are created in three of those sizes. The effect of this compounded with standardized placements of those sizes creates an insurmountable challenge for the attention of users. Part of the onus of solving this problem is on publishers. As masters of their domain they have the ability to innovate. Two start-ups I’m involved with are working in this area and seeing incredible results matching a data layer with breakthrough creative formats. The challenge of course is getting this to scale but the performance (we’re talking CTR of 10-20% in some verticals) warrants tremendous excitement as these companies go from bootstrap to chinstrap in 2010.

POS Closes the Loop: Two of the most mind-blowing conversations for me this past year were speaking with companies actively involved in using offline POS (Point-of-Sale) data in the digital marketing loop. This is “first-party” data at its finest. After learning about how they are working I have no doubt that the future of targeting, re-targeting, eCRM and increasing LCV (Lifetime Customer Value) rests in this area. The verticals where this data can be effective are limitless. The platforms where it can be used are ubiquitous. That is one giant market that can’t be ignored. This is but one space where I think we’ll see dollars shift from soft metrics to hard metrics around retention and increased customer value. The über competitive nature of 2010 and beyond demands it.

 

2009 Recap: My Faves, Posts & Presos

"A friend is one before whom I may think aloud." - Emerson

2009 was an amazing year of discovery for me and I tried to share as much of that here as I could. This year also presented a sea change in my writing because I started using a new communications platform, Twitter (you can follow me here). Many ideas that in the past would have become full-blown posts got tweeted into the stream (or is it an abyss). As a result my pieces tended to be more thought out, longer and less frequent. Also, my subject matter took a distinct turn. Last year I mainly blogged about challenges facing advertising while this year my focus was on the challenges facing publishers. So in case you missed something the first time or want a refresher I have curated a years worth of posts and shared my favorites below.

The Publisher's "Penta-tech":

Transcendence: The Power of Publishing is Marketing

Reaping The Ads You Sow

People & Performance NOT Pages & Prices

Pubs Need to Get the Performance $ignal

Read All About It: Online News Has No Clue About Optimization

Other Stuff:

API Battle Plans: Fighting for Next

Data is Easy. Optimization is Hard.

A Study of Value Creation in Real-Time Search

The Market Forces Killing Display Advertising

Audience: Display Advertising’s Cat in the Hat?

Presentations:

Advanced Landing Pages - SMX West

Interviews:

Interviewed by Aaron Wall at SEO Book

Interviewed by AdExchanger

Lastly, happy and healthy holidays to all my readers, commenters and subscribers both old an new. I truly appreciate and value your interest in what I have to say. See you in 2010.

Read All About It: Online News Has No Clue About Optimization

I’ve been reluctant to write more about publishers issues with monetization having recently written pieces here, here, here and here but the recent spotlight cast by Rupurt Murdoch on Google’s traffic and sympathetic follow up pieces by respected writers like Tom Foremski and Michael Arrington have now boiled me over.

Having spent the better part of a decade optimizing and monetizing both natural and paid search traffic on a daily basis I want to directly address the two memes now gaining velocity. One is that search traffic is “low quality.”  The other is that publishers should leave Google and form a Bing “collective.” Both concepts are ludicrous.

The Quality of Search Traffic:

Search traffic is inarguably the best traffic that exists on the web for monetization because of the recovery or discovery goals that are expressed in the query. The referring URL passes along rich data sets with it that can be further parsed for optimization. Search traffic also trends in remarkably predictable temporal patterns as do the event driven behaviors associated with it.

So the issue is not that the traffic quality is low but that sites like the Wall Street Journal and many others do little or no site side optimization for it. The referrer data is robust enough for the WSJ to deliver an amazingly relevant, compelling and dynamic experience. The technology is there to do a myriad of things with this search traffic especially reducing bounce rates, increase subscriptions, collecting leads and funneling visitors into higher value areas of the content. If publishers treated every page like a landing page and thought of themselves as much marketers as publishers they would be generating much more revenue. After all, user intent is generated on the publishers domain. It only gets fulfilled on Google.

How inept are newspapers? Let’s take the data that they themselves provided in the recent American Press Institute Revenue Initiative Report (09/14/09).

• Net monthly visitor rates have not increased since 2003
• Percentage of 2009 total online revenue from SEO (large sites like WSJ): 0%
• Percentage of 2009 total online revenue from SEM (large sites like WSJ): 1%
• Only 23% of publishers are monetizing registration
• Only 11% of unique visitors are registered
• Only 25% use registration data for ad targeting

Publishers should be disgusted with these efforts and should take a long look in the mirror before they start blaming others for their demise.

Publishers Leaving Google:

Let’s get one thing straight. Google is the number one brand in the world and a more trusted and valued brand to the general public than your newspaper. Google has been getting better and better helping people for a long time now and keeps extending its useful reach. At the same time news has become more and more commoditized and less and less trusted. The Google habit is real. People are not going to stop using Google because your content is not included in their index. It is this exact arrogance about content that has lead to the demise of traditional media – at first devaluing the web as a medium, then devaluing search and now devaluing the users of the medium (see above).

One more data point from the API revenue report that is relevant here:

• Preserving print revenue is a primary driver to paid online access models [71%]

Search fractures the content hierarchies and information architectures publishers created to assist them in deriving revenue from their media. As someone that has worked with a number of the most well know publishers I sympathize with their being held accountable to many old media bosses and their legacy goals. There are a number of really smart people in this space especially at places like CNET and WPNI. Still, I cry no tears for their demise. Digital bits move at the speed of light. Digital strategy and execution must move along side it.

Interviewed by AdExchanger

If you are at all involved in display advertising AdExchanger.com is a daily must read. So I was really psyched when they wanted to interview me and that interview was published today. It covers what we are doing at RAMP Digital and my POV on the state and future of the digital ad industry.  

Read Jonathan's interview on AdExchanger.com

People & Performance NOT Pages & Prices

The following post was originally published as a guest post for the AdMonsters blog in advance of my speaking at their Leadership Forum. For more reading on the ideas contained here I also recommend this post and this post on Chris Dixon's blog.

Fragmentation = Problems & Opportunities

No one will argue that the Display marketplace is an incredibly fragmented and inefficient system. Try as they might this advertiser driven ecosystem has created a few problems long hidden by overinflated CPMs. First are the serious issues in the market’s ability to scale. Second, is the arbitrage and optimization often occurring in conflict and silos. Third and worst of all, the ads suck.

In contrast to Display, Search over a shorter period and having grown-up as a publisher side solution has 2 million active advertisers - all participating in a realtime auction based systems based on a single criterion, ad performance. The contrast is startling as are the results – Search spend will double that of display this year.

Enter the Network Paradigm

Just like Wall Street, Madison Avenue also has that New York City reality – if you’re losing money then someone else is making money. Once spend hits the street it is a zero sum game. Into this fragmented world of media buyers, planners, ad serving and publishers came the ad networks - ostensibly filling a huge need for publishers. Yet it now seems ad networks are the collateralized mortgages of the online world. Just the other day Tim Armstrong declared the AOL want to be the digital equivalent of Goldman Sachs, so the analogy has some credence.

This has allowed two things to happen. On the sell side as inventory increases and prices drop, the media ROI for performance marketers continues to increase. So too does their spending. 57% of display advertising was performance last year (IAB/PWC). This year the number will increase for fifth consecutive year at the expense of branded CPM. First half 2009 online display ad spending continues shifting to pay for performance with greater velocity: (TNS +6.5% (CPM +CPC/CPA); Nielsen -1% (CPM only).

On the buy side what’s happening is that while Premium CPMs keep dropping those rising performance spends are being kept at huge margins by networks. For every remnant media dollar roughly a quarter of that is kept by the agencies, a quarter goes to the pubs and half or more of it goes to networks. It’s a damn fine business. No wonder VC’s have funded it up the wazoo to the tune of 2 billion over the past few years.The problem is all of this is cannibalizing the channel. Better tools have produced lower yield for publishers and higher ROI for performance advertisers.

Consequences of Alternate Realities

If there is too much weight on one side it sinks the ship. Publishers can’t survive with this inequity much longer. They own the audience and the content. The value is being created in their environment. They deserve more.

The media reality is that publishers are getting $7k in revenue from inventory being monetized at $48k (I know, I’ve run these RON performance campaigns). The content reality is that in digital power shifts away from the content and towards the distribution of it. The same way Search has done this with content so too have the ad networks done it on the ad side. It’s time for pubs to take the power back.

It’s beginning to happen. A number of publishers are turning into marketing agencies themselves. Meredith has just hired Martin Riedy CEO of Publicis Modem to lead its 400 employee integrated marketing unit. Publishers are now building microsites and custom ads for advertisers in order to get their spend. Are we that far away from NYTimes going to Ford and delivering 500,000 leads over a year for $25M? I don’t think so. Disintermediation anyone?

The Final Frontier

But this change doesn’t happen in display unless there is a fundamental shift in the mindset and technology. Like search, visitor and advertiser value can only be delivered and game-changing revenues can only be achieved for publishers if we start optimizing for people and performance, not pages and prices.

For example, we know from Search that content consumption and temporal trends provide amazing intelligence to deliver relevance. Most large publishers are privy to these interest trends but they do not have the data capture systems to quantify it or the targeting systems to leverage it or the advertising systems to monetize it.

Just like Search the forces that drive monetization are everything from personal needs to macroeconomic or geographic issues. By studying content consumption patterns publishers can understand even earlier than Search the opportunities to match the information and services needs of their audience. Intent is not generated in Search. Intent is generated in publishers content and then moved to Search by the user.

These huge changes require new platforms and tools. For publishers the revenue generation tools available to them have not kept pace with the investment and innovation on the ad side.  The irony is that while agencies are not staffed to leverage most of the more analytic and technical tools publishers sit on a goldmine of optimization mindshare in with their ad ops teams. If it’s ever going to happen, now is the time. Nothing less than the future of the Display market is at stake.

Reaping The Ads You Sow

Trends in search provide amazing intelligence. So much so that Google has provided a destination site with information even non-data junkies will find interesting. You can look at this data and understand two things about online marketing.

1. TV drives a great deal of search inventory/demand/price/scale
2. Getting media channels to work together can reap huge rewards

Different media channels serve different purposes for marketers and as Search has known for years demand generated by TV, Print, Radio, comes online and ends up as people searching for more information from publishers.

Most of the forces that drive intent occur offline. These vary from personal needs to macroeconomic and/or geographic issues. By studying content consumption patterns the way Google studies queries publishers can understand (even earlier than Google in many cases) what opportunities exist to match the information goals of their visitors with helpful and useful offers.

That’s all that Google is doing, helping people complete their goals. Being relevant to the needs of their visitors in a way that adds value to their experience, the marketer and their own bottom line. Their challenge is looking at the web in its entirety. For pubs the challenge becomes much easier looking within a single domain - especially a vertical one.

If we’ve learned anything 15 years in and with only 7% of brand spend it’s that Digital is not a medium you can use to get people to pay more for a product or service than a lower cost alternative - the essence of brand marketing. Digital actually facilitates the opposite. So where do all those publishers go that have been waiting with bated breath for brand demand to drive their CPMs higher and higher? There is only one option. Get in the demand capture game.

While publishers are privy to the same interest trends as Google they do not have the data systems to capture it, the targeting systems to leverage it or the advertising systems to monetize it (many pubs do have their own internal search applications capturing this data but they do jack shit with it). Also it’s not just the historical data that they can leverage -- as big an opportunity might be in real-time data.

It's time to move away from old media strategies like forecasting, allocation and planning. They never fit on a web where attention unpredictably ebbs & flows across it. The very idea of a campaign is antiquated when there is demand to be captured 365/24. How many more times will publishers fail to leverage events like Michael Jackson’s death or getting 9M impressions over 2 hours after a link is posted? How many more pubs will I speak with that have no idea how much traffic they get from Search each month, let alone daily by vertical.

If there is a wrinkle in the simplicity of the strategy (though I acknowledge the execution is fraught with challenges to norms) it is the number (25%) of search queries that are new everyday – never before seen. This "intention market" dynamic only serves to exemplify further of the nature and importance of the  real-time web.

There’s no “death by Google” going on here as many publishers would like to claim. Furthermore, this is not all about “bottom of the funnel” as many marketers would have you believe. All through the funnel there is plenty of valuable intent. However, if publishers don’t invest in harvesters and reap what they are sowing with their content they will simply starve themselves to death. 

It’s taken well over a decade for these ideas to get any traction at all and there are still plenty of holdouts, especially those who feel their business is publishing, not marketing. But the inevitable fact is online is not a branding/awareness/demand gen tool. It never was. Online is a demand capture tool – and serendipitously the greatest medium ever created for it. Let’s rejoice in that fact and get to work. Fall is the time to harvest.

 

Pubs Need to Get the Performance $ignal

 

There is growing debate about the future of journalism and to a greater extent publishing in the digital age. The axis of the conversation is revenue generation or lack thereof. The problem in this space is one that frustrates me enormously because the answers are there. We know how to make money on the web but old mindsets continue to impede progress and have consistently over the past decade allowed upstarts to control both the delivery and revenue generation associated with digital publishing of news and information.

One core issue I continue to witness is the fundamental misalignment between the advertising publishers want and the advertising that works in a news and information medium, be it digital or analog. To this end the OPA (Online Publishers Association) and the IAB have been vehement that it is lack of creativity preventing brand money bags from flowing into the space. I couldn’t disagree more.

The fact of the matter is that when prime-time television CPM is $12, your audience is 12 million and your ad runs for 30 seconds this offers more ad value (and will continue to) for demand gen than online. Also, despite grasping at straws for excuses (clicks don't matter, we're not using the right attribution metrics, etc. etc.) branded display ads don’t work. The facts are:

1. Unit performance sucks for everyone
2. Any demand gen created goes right to Google

Look at AM Radio - maybe the most comparative medium in user behavior to web publishing. Commercial AM is primarily focused on news, information, gossip & opinion. It is programmed for shorter bursts of attention due to the nature of how people interact with the medium (weather on the 1’s, Traffic on the 8’s, etc.). The web is quick twitch just like AM. Our click behavior online closely mirrors our switching radio stations trying to get the information we desire.

AM is not an immersive medium like its high fidelity sister FM. Rather, AM tailors its content and it’s advertising to audience behavior. As any listener of AM radio knows, direct response (DR) dominates the medium. DR radio ads often play off the trust factor with the station and/or host – both great ways to leverage ad performance non-existent in display advertising (but interestingly present it social media and search).

Direct response radio is a huge business and one dominated with much the same offers that people on the web respond to. The optimization methodologies also closely mirror each other. Interestingly direct response ads are also the ones growing to dominate online. More interesting is this growth is based on performance. Publishers ignore this audience response at their own peril.

This begs the question will there be two webs -- The AM web and the FM web? The answer is yes and it already exists. The FM web is where we go to for rich media experiences - videos, gaming – where we go to have fun. Because these experiences immerse us, the type of marketing should be different. The AM consumption behavior to ‘get what we need and move on’ lends itself much better to DR where in more immersive digital experiences brand messages should wash over so we recall them as we walk through the supermarket.

This brings us back to the misalignment. Revenue starved publishers and budget hungry advertisers have been infatuated with demand gen dollars for display and have gone so far as to rip DR a new one (while gladly taking their ad network backed money). This desire for more media budget has also manifested a false and unaccountable sense that DR ads diminish the publishers own brand value. It’s all a bunch of crap both from a user sentiment perspective and performance perspective.

The lesson is that understanding the way people consume media is paramount to optimizing it for revenue generation both with your original content and your advertiser content. There is much we can learn from Amplitude Modulation.

The solution is a major paradigm shift. DR needs to be embraced, it needs to be “legitimized” and the revenue captured with the publisher’s audience, content and data needs to be distributed in a more equitable manner. The problem is not one of revenue generation. The dollars are there, they just need to be shifted. 

Recap: Search Becomes the Display Operating System

"So yeah I sampled your voice, you was using it wrong/ You made it a hot line, I made it a hot song" – Jay Z, Takeover

It was with the swagger that comes from presenting at my 5^th SES in San Jose that I created a new presentation below for the session I put together called “Search Becomes the Display Operating System.” Leading off the session my presentation focused on the high level issues hindering display and changes/impact of the more search like system taking hold.

Search Becomes Display

View more presentations from jonathanmendez.

Josh Jacobs, Vice President and GM, Advertising Technology, Yahoo! spoke next and his presentation primarily focused on attribution and using search and display together as the new way of doing business. While I get the need at the CMO level I’ve never been a big of attribution metrics. I think this misses the mark – the mark being that each channel needs performance metrics associated with them and said performance should be optimized and judged based on the in-channel results regardless of the overall picture. As a channel this conversation seems to me to be a red herring used to belittle the underlying value of search and the viability of performance branding in display in an effort to get more dumb money into display. That said, the rest of Josh's presentation was great especially when concentrating on Search retargeting with Yahoo and RMX. Josh had slide animations the likes of which only Yahoo’s marketing & PR team can deliver. Not to mention, Josh seems to be generating traction for my analogy of display as the Golden Shower. Thanks man!

Next was Rajas Moonka, Group Product Manger of Google Content Network. His take was about ease of use for the advertiser with both their enhanced display ad builder launching last week as well as their buying and planning tools. Google was also very upfront about their interest based advertising and the need for data collection transparency touting their already in place systems of targeting opt-out and ad preference manager. I like Google’s view of thinking about display ads as little landing pages (this was after all the reason I ventured into the wilds of display to begin with) and Rajas touched on two points that don’t get enough coverage. 1) Google is media format agnostic across all content including the SERP meaning as long as the creative is helpful or useful to the user performance rules whether it be graphical, video or text ads. 2) There are major data collection and profile creation problems inherent in people conducting so many different actions across channels and platforms – targeting based on these rules is only going to get harder in the coming years, not easier (and who says it works to begin with! :)

The venerable Scot Rafer batted clean-up for data collection & targeting expert Lookery. Scott’s quote about search becoming display’s operating principle served as my inspiration for starting this session at SES NY in the Spring. He is one of the few people in this business that does not bullshit you so it was refreshing to hear him echo Google’s issues around the pratfalls of the data collection business as well as the benefits that can be derived from it. I’ve always been a fan of Lookery approach and view them as the Occam’s Razor of data.

So some great content here and it looks like the Session will continue onthis December in Chicago and by the time we get back the NYC in 2010 the takeover will be in full force. Hopefully we will splinter into two sessions – one on technology and one on strategy.

Data is Easy. Optimization is Hard.

For the past 15 years web analytics has been namely about one thing, counting. Counting is very important and as an industry we have become infatuated with it. Never before could a medium really count what was happening with it. Attributable media was and continues to be truly revolutionary.

Attribution quickly formed the business models for the new medium -- traffic buying, affiliate marketing (have we forgotten how Amazon got to be Amazon), SEO and Email are all channels that emerged based on one principle. You could count what you got in return.

In measured media, performance becomes its driver and thus optimization became the obligatory next progression. However for much of digital media, namely site content/user experience & display advertising, it has been a long slog towards optimization. A medium capable of being optimized to deliver persistent relevance may only be (by my best estimate) about 5% there.

Of course if we want to look for optimization inspiration we look at Google. Paid Search serves as our shining example of what optimization is capable of. Many are trying to emulate their models for success but search is only a small piece of our digital experience.

Still, there is one important lesson we can take away from search. We can optimize the medium up to the point of diminishing returns. This is simply amazing. Yet, most “experts” and certainly C-level execs don’t even realize this is possible. Most clients will not believe it. But it is an economic law (and one that data and ad exchanges will put to the test).

Not to be lost in all the dashboards and spreadsheets is what we are counting - the experience of people. Performance is based on the actions that control the medium – content, experience and people’s response. There is of course the ability to optimize the buy-side however if we have learned anything as performance marketers it is that the sell side optimization factors most highly into optimization. In this regard we can simply define our goals as optimizing the presentation and delivery of content.

This feedback loop is one reason the web experience has the amazing ability to be optimized and should improve for years to come…if we can get there. Optimization is hard. It requires some measure of testing and analysis -- from bidding systems to creative performance. And data is a funny animal. There is no such thing as a perfect data set and often there are outliers. As we’ve seen this past year, even the world’s best systems are unable to prevent market forces from skewing predictive models to the point of rendering them useless.

There is also the “Predictive Paradox.” As we witness everyday in real-life people’s behavior is simply unpredictable over short periods of time. Yet incredibly and more often than not, over longer periods of time the differences in behavior normalize without significant variation. What this means to behavioral marketers is two things: 1) it is really hard to accurately assess wins that take place over short periods of time & 2) it is really hard to improve results by a large margin over a long period of time.

The other difficulty with optimization besides statistical significance is quality of data -- how much noise is in the data set. Optimization of ads or any content has so much to do with the surroundings. Content, layout, visitor source, visitor familiarity with site, and probably about another hundred or so factors. With so much noise the more complex the testing the more false positives in the numbers. Yet for some reason we’ve been led to believe complexity is sexy when in fact it is accuracy that is sexy.

There is one last thing we should never forget as we spend more time optimizing digital media and it may be the most important aspect. Counting tells only part of the story - it tells you what people did. It does not tell you why.  It does not provide answers or shed light on the actions people never realized they could take. To a large degree these answers can only be achieved through testing methodologies and observational research. Be wary of any predictive or targeting system not continually validating its assumptions with these methods…and good luck optimizing.

Previous Relevant Posts:

Expert Guide to Multivariate Testing Success

Capturing the Gorilla: New Ways to Quantify the Value of Search

On-Site Targeting: Crawl, Walk, Run Strategy

The Power of Brand to Influence Outcomes or Why Brands Will Always Rule Digital