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Batman, the tortoise vs. the hare, and internet marketing

So, we’re beginning to enter the dog days of summer, when thoughts turn to family vacations and fun in the sun. We’ve long since stopped worrying about fitting into our swimsuits and now just want to enjoy the surf. In fact, we’re right in the thick of summer movie season with one of the most anticipated movies of the year due on our doorsteps this week. Hollywood has a lot riding on the success of the latest Batman movie, having dropped at least $250 million into making the film. And that’s before marketing expenses. Unfortunately, I see a lot of businesses taking a similar, “Hollywood blockbuster” approach to their marketing, putting all (or many of) their eggs in one basket and hoping for a monster hit. But is that the right approach? Let’s take a look.

I realize nobody likes a math quiz, particularly in the middle of the summer, but hang with me for a second. Imagine two scenarios:

  1. In the first one, you’ll invest your entire testing budget in a single, big-ticket initiative. If it succeeds, you expect a 30-35% increase in year-on-year profits. Of course, if it fails, you’ve blown your whole budget.
  2. In the second scenario, you’ll split your budget into a series of small monthly tests, each of which are expected to increase sales by about 2%-3%. Obviously, any single test could fail to produce any result, but you’ll risk only 1/12th the total budget on each.

budget
Photo credit: 401(K) 2012

Which is better?

Well, as you might expect, it’s kind of a trick question. You see, an increase of just 2.4% monthly, compounded over the course of the year, equals a 33% lift for the year. So, the two outcomes are roughly equivalent.

Well, except for the amount of budget you risk at any one time.

In this specific (and, to be fair, somewhat unrealistic) example, you reduce risk by spending only a small amount each month in exchange for smaller expected returns. You’re probably not going to release any blockbusters, but you’re also unlikely to experience any major flops, either.

By testing and measuring your activities, you’re not forced into a “blockbuster mentality,” where the whole gets reduced into hits and flops. Whether you call it agile marketing or simply “doing it wrong quickly” you can put your emphasis on achieving long-term results. Yes, it’s much more “tortoise” than “hare.” But try to remember who won that race.

For instance, I once conducted a test on an e-commerce site that improved conversion rate by 15% and sales by 10% simply by increasing the font size in the shopping cart. The entire test cost the company a few hundred dollars to run and resulted in roughly $10 million in annual sales. Now, this is an extreme example and one that’s not, sadly, typical. Usually most tests cost more to run–and produce less dramatic results. And, sure, I’ve seen plenty of tests that failed outright. But, the costs of those failures almost always was offset by the successes of other tests, either singly or in the aggregate.

Of course, as Stanford professor Sam Savage likes to say,

“Uncertainty is an objective feature of the universe. Risk is in the eye of the beholder.”

For instance, I fully recognize that there are times you need to swing for the fences. Not everything you’re going to do lends itself to this type of testing. Maybe your company is launching a major update of your main product, including broadcast media, press and your CEO ringing the opening bell on the New York Stock Exchange. Or you’re a startup that’s shifting customer categories completely and you need to gain attention for your brand. It’s not to say you can’t test anything in those periods, but it’s also understandable that you’re going for more of a blockbuster.

The point is, one size doesn’t fit all, at least not all the time. But by mixing testing into your existing activities, you can improve your results in a steady fashion, month after month. And, using those steady results, look back and show your boss that you still had a blockbuster year.

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Tim Peter

Tim Peter built his first website in 1995 and loves that he still gets to do that every day. Tim has spent almost two decades figuring out where customers are, how they interact with brands online, and delivering those customers to his clients’ front door. These efforts have generated billions of dollars in revenue and reduced costs. Tim works with client organizations to build effective teams focused on converting browsers to buyers and building their brand and business. He helps those companies discover how marketing, technology, and analytics tie together to drive business results. He doesn't get excited because of the toys or tech. He gets excited because of what it all means for the bottom line. An expert in e-commerce and digital marketing strategy, web development, search marketing, and analytics, Tim focuses on the growth of the social, local, mobile web and its impact on both consumer behavior and business results. He is a member of the Search Engine Marketers Professional Organization (SEMPO), HSMAI, and the Digital Analytics Association. Tim Peter’s recent client work covers a wide range of digital marketing activities including developing digital and mobile marketing strategies, creating digital product roadmaps, assessing organizational capabilities, and conducting vendor evaluations for diverse clients including major hospitality companies, real estate brands, SaaS providers, and marketing agencies. Prior to launching Tim Peter & Associates, LLC, a full-service e-commerce and internet marketing consulting firm in early 2011, he worked with the world’s largest hotel franchisor, the world’s premier independent luxury hotel representation firm, and a major financial services firm, developing various award-winning products and services for his customers. Tim can be reached at tim@timpeter.com or by phone at 201-305-0055.

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