Embracing change for happiness and profitability

An interesting weekend article on the BBC website regarding change is at first counter intuitive, but a deeper analysis highlights how you can use some knowledge in an uncertain situation to give you a better chance of making the right choice.

The article on the BBC website is based on choices and happiness, but exactly the same principles apply to digital marketing where you know some information but not all.

Probability thought experiments to help online marketing

The scenario or thought experiment (reproduced from the BBC article by Al Kennedy) is as follows:

Imagine three identical boxes. Two are empty and one contains your heart's desire, perhaps love, perhaps a nice cup of tea. A kind, if slightly perverse, person says you can pick one box and own its contents. Let's say you select Box A. The person then shows you that Box B is empty. So either Box A - your choice, or Box C - a mystery, contains your happiness. Now, you can change your choice to Box C, or stick with Box A. But what gives you the better chance?

The question is “Should you change your selected box or not?

There is an answer to this. It is better (exactly twice as good) to make the change. Probability analysis shows this very clearly, yet a ‘common sense’ approach will often lead to the ‘both equally good’ answer. The information that Box B is  empty is hugely valuable and switches the odds considerably in the favour of choosing the other box.

Advanced digital marketing can and should (in my opinion) use exactly the same type of analysis. When information on poor data or no results is used in the decision making process, you can alter the chance of making the correct bidding decision in your favour. For large spending accounts or accounts in competitive markets this can make a huge difference to profitability.

The same techniques can be applied to user journey optimisation on websites. A lacking of many current systems is no use is made of the null data. Yet this is information. And the box problem is remarkably similar to the problem of identifying where next on page the user will click. It is interesting to note how probability and statistics can provide huge value within advanced website optimisation. But understanding how the probability theory works enables you to go further and actively optimise the page to ensure the visitors always ends up where they (and the website owner) want. With current  technology this is unlikely to be the cup of tea in the thought experiment above, but maybe the purchase of some kitchen equipment or a new brand of tea.

Rachel Cornish 

ExtraDigital have always made use of advanced statistical analysis for digital marketing to acheive the very best performance in the most competitive markets. These techniuques are most useful for PPC management and website conversion optimisation.

Sunday 8th September 2013

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