There’s a phenomenon in the digital analytics world that I’ve never been able to understand: Personalization and website optimization projects are consistently and chronically underfunded by advertisers. This is something that needs to change.
Let’s take an example: suppose an ecommerce website has a $10 million digital advertising budget. This budget likely includes search, programmatic display, social, direct deals etc. Let’s also assume that the website has a good way of attributing conversions to digital. Perhaps they have a sophisticated multi-touchpoint attribution strategy. Perhaps they are using the much maligned last-click attribution. It doesn’t matter. Let’s just assume it’s there. Now I’m going to give you a choice.
- Spend $1 million and increase media budget by 10%
- Spend $100k on site optimization to increase the conversion rate by 10%
Which would you choose? You may be surprised to find that option (b) is usually better. But why?
Obviously (b) is cheaper; but at the same time, it gives you more conversions. First, improving the conversion by 10% applies to all conversions, not just the media-driven conversions in (a). Secondly, if you increase a media budget by 10%, you typically increase media-driven conversions by less then 10%, because you have already optimized the original budget, so every new dollar spent performs a little worse.
If it’s so easy to see that (b) is the superior option, why do so many organizations choose (a)?
The main reason seems to be silos. Marketing might control the media budget and IT might control the site budget. Operationally, It might be easier to modify the marketing budget – even if the higher spend yields inferior results. The point here is that many advertisers are making less-than-optimal decisions because they can’t see the bigger picture.
Sometimes as analysts we get trapped in our own silos. Maybe we only do web analytics. Maybe we only optimize programmatic buys. Maybe we only do SEO. However, we owe it to ourselves and our clients to look outside our silos and help our clients spend their resources in places where it matters most. And, from what I’ve seen, one of those places is site optimization.