This word cloud represents the answer to the question of which areas are you going to be experimenting most heavily in the coming year, given by more than 600 representatives of different online companies.
Experimenting is one of the key tools of marketing engineering, and although the results of test-and-learn approaches are more widely appreciated, establishing the most appropriate culture is what holds most companies back, if we neglect the fear of failure.
A study called digital distress conducted by Adobe found that most marketers agree that digital marketing approaches at their organization are in a constant cycle of trial and error, highlighting the importance of a business culture that allows for experimentation. However, according to research by the Chartered Institute of Marketing (CIM), only a quarter of marketers strongly agree that their senior team support an experimental approach to digital and social media and less than one in five believe such efforts are highly effective. A really small number in my opinion that is contradicted by the effectiveness of the experimentation methods.
Consider two “born-digital” companies, Amazon and Google. A central part of the Amazon research strategy is a program of “A-B” tests where it develops two versions of its website and offers them to matched samples of customers. By using this method, Amazon might test a new service feature, a new recommendation engine for books, a different check-out process, or simply a different layout or design. Amazon sometimes gets sufficient data within just a few hours to see a statistically dominant trend.
This ability to rapidly test ideas changes fundamentally the company’s mindset and approach to innovation. Rather than agonize for months over a choice, or model hypothetical scenarios, the company simply asks the customers and get an answer in real time.
According to Google economist Hal Varian, his company is running on the order of 100-200 experiments on any given day, as they test new products and services, new algorithms and alternative designs. An iterative review process aggregates findings and frequently leads to further rounds of more targeted experimentation.
At the same time, Google’s competitors, partners, customers and third party consultants are doing their own experiments, creating a complex, interacting ecosystem that demands continuous innovation. While Google currently dominates the market for web search, it is unlikely that it would have any market share at all if it still relied on the original, unmodified PageRank algorithm that Larry Page and Sergey Brin developed in 1998.
Without neglecting the importance of gathering passive data, measurement is far more valuable when coupled with conscious, active experimentation and sharing of insights. Therefore, it is encouraging to see that almost two-thirds of company respondents have a strong appetite for digital experimentation and more than half disagree that their digital plans for 2014 will involve ‘more of the same’.