Conversion optimization
Encyclopedia
In internet marketing
, conversion optimization, or conversion rate optimization is the method of creating an experience for a website or landing page
visitor with the goal of increasing the percentage of visitors that convert into customers. It is also commonly referred to as CRO.
and ecommerce internet marketers to improve their website's results. As competition grew on the web during the early 2000s, Internet marketers had to become more measurable with their marketing tactics. They began experimenting with website design
and content variations to determine which layouts, copy text, offers and images will improve their conversion rate.
, they belatedly discover the behavior is not consistent. Online marketing response rate
s fluctuate widely from hour to hour, segment to segment and offer to offer.
This phenomenon can be traced to the difficulty humans have separating chance events from real effects. Using the haystack process, at any given time marketers are limited to examining and drawing conclusions from small samples of data. However, psychologists (led by Kahneman
and Tversky) have extensively documented tendencies which find spurious patterns in small samples, thereby explaining why poor decisions are made. Therefore, statistical methodologies can be leveraged to study large samples and mitigate the urge to see patterns where none exists.
These methodologies, or “conversion optimization” methods, are then taken a step further to run in a real-time environment. The real-time data
collection and subsequent messaging as a result, increases the scale and effectiveness of the online campaign.
". Some test methods enable one to monitor which headlines, images and content help one convert more visitors into customers.
There are several approaches to conversion optimization with two main schools of thought prevailing in the last few years.
One school is more focused on testing as an approach to discover the best way to increase a website, a campaign or a landing page
conversion rates. The other school is focused more on the pretesting stage of the optimization process. In this second approach, the optimization company will invest a considerable amount of time understanding the audience and then creating a targeted message that appeals to that particular audience. Only then willing to deploy testing mechanisms to increase conversion rates. The article "a case against multi-variant testing" outlines some of the reasons testing should not be the only component in conversion optimization work.
s have the greatest predictive power
, including any multivariate
relationship. A combination of pre- and post-screening methods is employed, dropping irrelevant or redundant data as appropriate. A flexible data warehouse
environment accepts customer data as well as data aggregated by third parties.
Data can be numeric or text-based
, nominal or ordinal . Bad or missing values are handled gracefully.
Data may be geographic, contextual, frequency, demographic, behavioral, customer, etc.
, financial planning, military logistics
and telecommunications routing. Goals should include maximization of conversions, revenues, profits, LTV or any combination thereof.
Such a platform should understand these and other business rules, then adapting targeting rules accordingly.
s have been built, ad/content servers use an audience screen
method to place visitors into segments and select the best offers, in real time. Business goals are optimized while business rules are enforced simultaneously. Mathematical models can be refreshed at any time to reflect changes in business goals or rules.
and other techniques together help to distinguish true effects from chance events. A champion/challenger framework ensures that the best mathematical models are deployed always. In addition, performance is enhanced by the ability to analyze huge datasets and to retain historical learning.
Internet marketing
Internet marketing, also known as digital marketing, web marketing, online marketing, search marketing or e-marketing, is referred to as the marketing of products or services over the Internet...
, conversion optimization, or conversion rate optimization is the method of creating an experience for a website or landing page
Landing page
In online marketing a landing page, sometimes known as a lead capture page, is a single web page that appears in response to clicking on an advertisement...
visitor with the goal of increasing the percentage of visitors that convert into customers. It is also commonly referred to as CRO.
Web origins
Conversion optimization was born out of the need of lead generationLead generation
Lead generation, or lead gen is a marketing tool used, particularly in internet marketing, to generate consumer interest or inquiry into products or services of a business. Leads can be generated for a variety of purposes - list building, e-newsletter list acquisition or for winning customers....
and ecommerce internet marketers to improve their website's results. As competition grew on the web during the early 2000s, Internet marketers had to become more measurable with their marketing tactics. They began experimenting with website design
Web design
Web design is the process of planning and creating a website. Text, images, digital media and interactive elements are used by web designers to produce the page seen on the web browser...
and content variations to determine which layouts, copy text, offers and images will improve their conversion rate.
Why conversion optimization
Frequently, when marketers target a pocket of customers that has shown spectacular lift in an ad campaignAdvertising campaign
An advertising campaign is a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication...
, they belatedly discover the behavior is not consistent. Online marketing response rate
Response rate
Response rate in survey research refers to the number of people who answered the survey divided by the number of people in the sample...
s fluctuate widely from hour to hour, segment to segment and offer to offer.
This phenomenon can be traced to the difficulty humans have separating chance events from real effects. Using the haystack process, at any given time marketers are limited to examining and drawing conclusions from small samples of data. However, psychologists (led by Kahneman
Kahneman
Kahnemann, Kahneman, Kahaneman :* Avraham Kahneman* Daniel Kahneman , an Israeli psychologist and Nobel laureate in economics* Harald Kahnemann-Oppenheimer, founder of Eulama...
and Tversky) have extensively documented tendencies which find spurious patterns in small samples, thereby explaining why poor decisions are made. Therefore, statistical methodologies can be leveraged to study large samples and mitigate the urge to see patterns where none exists.
These methodologies, or “conversion optimization” methods, are then taken a step further to run in a real-time environment. The real-time data
Real-time data
Real-time data denotes information that is delivered immediately after collection. There is no delay in the timeliness of the information provided. Real-time data is often used for navigation or tracking....
collection and subsequent messaging as a result, increases the scale and effectiveness of the online campaign.
How conversion optimization works
Conversion Rate Optimization is the process of increasing website leads and sales without spending money on attracting more visitors by reducing your visitor "bounce rateBounce Rate
Bounce rate is an Internet marketing term used in web traffic analysis. It represents the percentage of visitors who enter the site and "bounce" rather than continue viewing other pages within the same site....
". Some test methods enable one to monitor which headlines, images and content help one convert more visitors into customers.
There are several approaches to conversion optimization with two main schools of thought prevailing in the last few years.
One school is more focused on testing as an approach to discover the best way to increase a website, a campaign or a landing page
Landing page
In online marketing a landing page, sometimes known as a lead capture page, is a single web page that appears in response to clicking on an advertisement...
conversion rates. The other school is focused more on the pretesting stage of the optimization process. In this second approach, the optimization company will invest a considerable amount of time understanding the audience and then creating a targeted message that appeals to that particular audience. Only then willing to deploy testing mechanisms to increase conversion rates. The article "a case against multi-variant testing" outlines some of the reasons testing should not be the only component in conversion optimization work.
Elements of the test focused approach to conversion optimization
Conversion optimization platforms for content, campaigns and delivery, then need to consist of the following elements:Data collection and processing
The platform must process hundreds of variables and automatically discover which subsetSubset
In mathematics, especially in set theory, a set A is a subset of a set B if A is "contained" inside B. A and B may coincide. The relationship of one set being a subset of another is called inclusion or sometimes containment...
s have the greatest predictive power
Predictive power
The predictive power of a scientific theory refers to its ability to generate testable predictions. Theories with strong predictive power are highly valued, because the predictions can often encourage the falsification of the theory...
, including any multivariate
Multivariate testing
In statistics, multivariate testing or multi-variable testing is a technique for testing hypotheses on complex multi-variable systems, especially used in testing market perceptions.-In internet marketing:...
relationship. A combination of pre- and post-screening methods is employed, dropping irrelevant or redundant data as appropriate. A flexible data warehouse
Data warehouse
In computing, a data warehouse is a database used for reporting and analysis. The data stored in the warehouse is uploaded from the operational systems. The data may pass through an operational data store for additional operations before it is used in the DW for reporting.A data warehouse...
environment accepts customer data as well as data aggregated by third parties.
Data can be numeric or text-based
Text-based
Usually used in reference to a computer application, a text-based application is one whose primary input and output are based on text rather than graphics or sound. This does not mean that text-based applications do not have graphics or sound, just that the graphics or sound are secondary to the...
, nominal or ordinal . Bad or missing values are handled gracefully.
Data may be geographic, contextual, frequency, demographic, behavioral, customer, etc.
Optimization goals
The official definition of “optimization” is the discipline of applying advanced analytical methods to make better decisions. Under this framework, business goals are explicitly defined and then decisions are calibrated to optimize those goals. The methodologies have a long record of success in a wide variety of industries, such as airline scheduling, supply chain managementSupply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...
, financial planning, military logistics
Military logistics
Military logistics is the discipline of planning and carrying out the movement and maintenance of military forces. In its most comprehensive sense, it is those aspects or military operations that deal with:...
and telecommunications routing. Goals should include maximization of conversions, revenues, profits, LTV or any combination thereof.
Business rules
Arbitrary business rules must be handled under one optimization framework. Some typical examples include:- Minimum (or maximum) weights for specific offers
- “Share of voice” among all offers
- Differential eligibility for different offers
- Mutually exclusive offers
- Bundled offers
- Specified holdout sample
Such a platform should understand these and other business rules, then adapting targeting rules accordingly.
Real-time decision making
Once mathematical modelMathematical model
A mathematical model is a description of a system using mathematical concepts and language. The process of developing a mathematical model is termed mathematical modeling. Mathematical models are used not only in the natural sciences and engineering disciplines A mathematical model is a...
s have been built, ad/content servers use an audience screen
Audience screen
Media planning is a science and one that has seen growth and increased discipline over the last few years through the introduction of new technology...
method to place visitors into segments and select the best offers, in real time. Business goals are optimized while business rules are enforced simultaneously. Mathematical models can be refreshed at any time to reflect changes in business goals or rules.
Statistical learning
Ensuring results are repeatable by employing a wide array of statistical methodologies. Variable selection, validation testing, simulation, control groupsScientific control
Scientific control allows for comparisons of concepts. It is a part of the scientific method. Scientific control is often used in discussion of natural experiments. For instance, during drug testing, scientists will try to control two groups to keep them as identical and normal as possible, then...
and other techniques together help to distinguish true effects from chance events. A champion/challenger framework ensures that the best mathematical models are deployed always. In addition, performance is enhanced by the ability to analyze huge datasets and to retain historical learning.
See also
- Audience screenAudience screenMedia planning is a science and one that has seen growth and increased discipline over the last few years through the introduction of new technology...
- Behavioral targetingBehavioral targetingBehavioral targeting is a technique used by online publishers and advertisers to increase the effectiveness of their campaigns.Behavioral targeting uses information collected on an individual's web-browsing behavior, such as the pages they have visited or the searches they have made, to select...
- Conversion (marketing)
- Conversion rateConversion rateIn internet marketing, conversion rate is the ratio of visitors who convert casual content views or website visits into desired actions based on subtle or direct requests from marketers, advertisers, and content creators...
- Direct marketingDirect marketingDirect marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional...
- Internet marketingInternet marketingInternet marketing, also known as digital marketing, web marketing, online marketing, search marketing or e-marketing, is referred to as the marketing of products or services over the Internet...
- Multivariate testingMultivariate testingIn statistics, multivariate testing or multi-variable testing is a technique for testing hypotheses on complex multi-variable systems, especially used in testing market perceptions.-In internet marketing:...
- PromotionPromotion (marketing)Promotion is one of the four elements of marketing mix . It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision....
- Digital marketing engineerDigital marketing engineerThe term Digital Marketing Engineer is used to describe someone that applies web 2.0 technology and digital marketing platforms for the purpose of achieving business goals. It is a hybrid role that involves marketing and technology knowledge...