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Old 02-16-2006   #1
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WebSideStory Report Indicates AOL #1 in Conversions

WebSideStory released some good news for AOL and MSN today, reporting on a January study of B2C "sites with a combined $3B in annual online sales" (nice sounding sample) which yielded results heavily favoring the two SE's user conversion rates.

See the press release and feel free to comment here. I found the following quote very interesting:

Quote:
“One way to explain the difference in conversion rates is demographics,” said Ali Behnam, senior digital marketing consultant for WebSideStory. “With portals rich in content and services, AOL, MSN and Yahoo may tend to appeal toward a more buyer friendly demographic. Google, meanwhile, may appeal to more browsers – those with less of an intent to buy.”
Barry just blogged this at SEW Blog too.

Last edited by Chris Boggs : 02-16-2006 at 10:35 PM. Reason: typo
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Old 02-16-2006   #2
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WSS PR machine at it again...

This metrics and methodolgy "light" press release from WSS leaves me scratching my head the same way I was two weeks ago when they announced the "groundbreaking" data that direct referrers convert better than SE's and the SE's convert better than outside links.

This latest data is again so general it is basically useless.

This is interesting: "One other important consideration to note in this study, WebSideStory officials said, is that the conversion rates are likely higher than industry averages because the sample sites are using best-of-class web analytics to improve their search engine marketing and optimization."

Funny, I thought it was smart people that can interpret data and strategize based on that data that actually improve SEM/O. That seems to me to be the differentiator. Not the analytic and reporting technology which for the most part (and I have used most of these packages regularly for the past 8 years) are very similar in their overall capabilites.
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Old 02-16-2006   #3
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But where would we be without analytics.... I remember when I first started at my current job they had the we spend $100 and get X so if we want 2X we spend $200.... there was no analytics going on....

I prefer best-of-class tools as they usually help give me more time to interpret the results and not more time getting the numbers....
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Old 02-16-2006   #4
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I like best in class analytics too..especially when they're giving the stuff away!
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Old 02-16-2006   #5
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Originally Posted by Jonathan Mendez
I like best in class analytics too..especially when they're giving the stuff away!
I would not compare Google analytics with WSS - one is best-of-breed while the other is a decent freebie
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Old 02-16-2006   #6
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I think they're pretty darn close. I was also not that impressed with the WSS bid management tool.

Neither one is exactly SPSS or SAS...
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Old 02-17-2006   #7
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Quote:
“One way to explain the difference in conversion rates is demographics,” said Ali Behnam, senior digital marketing consultant for WebSideStory. “With portals rich in content and services, AOL, MSN and Yahoo may tend to appeal toward a more buyer friendly demographic. Google, meanwhile, may appeal to more browsers – those with less of an intent to buy.”
Yep, that was my first thought. AOL charges an arm and a leg for their service. Who else is going to pay that much for something they can get anywhere else at a third the price, except someone with money burning a whole in their pocket.

Interesting study though. Something to file away, but certainly not anything groundbreaking.
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Old 02-17-2006   #8
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Originally Posted by vayapues
Yep, that was my first thought. AOL charges an arm and a leg for their service. Who else is going to pay that much for something they can get anywhere else at a third the price, except someone with money burning a whole in their pocket.

Interesting study though. Something to file away, but certainly not anything groundbreaking.
AOL users as a group are just different - not so much money in the pocket - though that is possibly part of it - but comfort people... they have not left AOL because it is what they know. Historically AOL users have always been willing to buy online... they do it when paying for the AOL service....
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Old 02-17-2006   #9
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The findings jive with what my own survey found a few years ago - AOL users converted more often than Google and Yahoo users.

At the time, I concluded that the reason was probably because AOL users were generally new to the web and more interested in having the web "work" for them. Experienced web users are more jaded and less likely to follow call to actions.
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Old 02-18-2006   #10
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At best, it’s an interesting observation. They state, “…AOL, MSN and Yahoo may tend to appeal toward a more buyer friendly demographic. Google, meanwhile, may appeal to more browsers – those with less of an intent to buy.”

There is no data to support this conclusion, it’s over-simplified, and full of holes. From this remarkably limited set of data, nothing can be inferred and to make any decisions on it would not only be irresponsible, it could be dangerous. There is no perspective on the data supplied from any other dataset much less any independent knowledge. The same analysis logic could be used to suggest that a little league player with a .550 record is far superior to any player in the Major Leagues, none of which come close to that record. Independent knowledge would tell you in the latter case that this was not true, but such independent knowledge does not exist in web analytics. We really know nothing very little about who uses AOL vs. Earthlink, vs. Netscape.

First, WWS has no idea whether anyone buys or don’t buy unless they buy on a given site at a given moment in time. WWS points to the fact that their clients tend to be more elite. Perhaps the Googler is less likely to buy on these elite sites and finds better deals elsewhere. It could also be that AOLers just don’t shop around as much while the other ones do. Perhaps the Googler converts 20% more often than anyone else, but shops 50% more sites than anyone else before making a selection. That doesn’t make the Googler is less of a buyer. It in fact means he is more of a buyer, just proportionately less per site he visits, but he visits more of them. He’s a better shopper.

If the AOLer doesn’t visit your site because he bought somewhere else first, you still lost the sale, but it’s not tracked into your stats because you don’t know he exists. When someone comes to your site and leaves, that doesn’t mean he isn’t a buyer, but THAT is precisely what WWS would have you to believe. The ONLY thing you can infer is that he just didn’t buy from you. You also don’t know how deep the analytics go. What if Googlers would be more likely to end up on a MySimon or Bizrate site and shop more stores? But here, does the referral track from Google through the MySimon site and Google get credit for it? Theoretically it should if you are trying to determine who buys based on what engine they use. But my guess is that the MySimon gets the referral credit, not the originating source at Google.

Second, these figures do not take into account conversion that happens offline as a result of being online. If Best Buy convinces the customer online but they call to purchase or go down to the store, they still converted, but the site does not get the credit. While this might only represent a small amount of gross conversions, nobody knows. And even if they did, such small differences in the stats would be quickly affected.

Third, at best this is data that might be of value if you sell everything to everyone, everywhere. It cannot be extrapolated to any given market segment with any given set of market variables for any given product and still retain what little value it might have had in the first place. How did price affect this data? You cannot take a conversion on a $10 item and extrapolate that conversion ratio to a $500 item, as a $10 buy is more subject to impulsive decisions. How did it break down into product categories? Buyers of Hillary Duff cell phones are going to convert much differently and for different reasons than computer buyers, and those will be different than those buying prescription medications, and on and on. What was the balance and price variables as associated with male, female, or gender-neutral products? What did the age demographic look like? Even where WWS is concerned with their large volume, there is not going to be even statistical distribution between marketplaces as they place their technology. They are going to be more heavily involved in one area or another simply due to affinity purchase patterns that they cannot control. THAT can have a massive affect on your results.

Their conclusion is that AOLers convert more often without more data (most of which they could not get if they tried) is only interesting as it applies the entire target market for every product for every website that they measure. No serious statistician would make such broad sweeping statements, let alone on such sparse and incomplete data. This tells me that there is one more company I wouldn’t do business with.

In marketing, one set of uncorrelated data is just data. In order to produce conclusions, you need perspective and to do that, you must have at least one more set of data. The more correlated data you have, the more you can determine. The ONLY way to determine who are better buyers are to study it from the consumer end where you first determine AOLers from Googlers from MSNers, and then track their buying habits.
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Old 02-18-2006   #11
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This is not the first study that has produced these results. AOL users have always been know to be more likely to buy online than other ISP users.
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Old 02-19-2006   #12
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The data is not in question. You can get the same results 50 times in a row, and all you've proven is that it can be replicated. It's the interpretation of this data without any reference point that is the problem... i.e. making assumptions when one or more other ones would also fit the data but be completely different, several of which were listed above.

The seemingly mosts obvious or first answer is not alway the right one. Their interpretation may or may not be correct. But any statistician who tries to define human behavior by a single stat is using "best guess" practices, and this is dangerous when significant reliance is placed on it. It's like trying to triangulate a location using only one reference. You can tell direction, but you cannot tell how far.
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Old 02-19-2006   #13
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Bottomline I would spend my advertising money at AOL if I had an ecommerce B2C site.
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Old 02-19-2006   #14
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Ausiewebmaster, wouldn't using those analytic tools to see, in a uniquie case, whether or not AOL was more profitable make more sense? And doesn't that then make this study a nice justification for AOL, and a nice starting point fpr advertisers in how to initially divvy up budget, and that is about it?
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Old 02-19-2006   #15
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I agree the tools should be used to determine ROI - the study is as you say a starting point.
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Old 03-05-2006   #16
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My take on it is similar to Papadoc's and Jonathan Mendez's. The demographic and behavioral differences among engines are now a staple "baseline" of any introduction to online marketing. But the AOL, MSN, Yahoo, and Google "stereotypes" are far overstated and would tend to lead to incorrect strategy.

These kinds of top-level data pale in comparison to testing your own campaign. And even if you test it all nicely I'm sure that the absolute dollars you'll spend at AOL won't be as high as elsewhere.

"Spending your advertiser dollars with AOL" is a pretty narrow approach, and it becomes less and less relevant as they lose market share. There are some kinds of offers that work over there, and many others that won't work any better than at the other engines.

Sure, absolutely at Google you are going to wind up, on balance, seeing more "browsers than buyers." That's because Google as a search engine has been built to respond to the way that people look for information, and to respect the fact that they are usually seeking information. *That's why Google's market share has grown*, and AOL's has declined.

It's also pretty obvious that shopping engines convert better to commerce than do search engines, or that the yellow pages convert better than let's say an ad during the hockey game, or that a person walking into a grocery store will 90% of the time buy something. But you have to get them to the shopping engine, the yellow pages, or into the grocery store in the first place.

In other words, it's an apples-to-oranges comparison. Google's lower conversion rate on some types of offers correlates *directly* with the delight of users in Google as a research tool, and thus the growth of Google's market share.

What we do know, from studies by companies like Hitwise and Netratings, is that there are some gender, age, and income differences among the engines. However, in comparison to the stereotypes, these are pretty minor.

All in all, this is a moving target. Some analysts used to believe that the training wheels for AOL'ers would never come off, that they would never gain sophistication as Internet users. Others used to argue that most users, even AOL users, would learn about other ways to search, and would stop confusing AOL with the Internet, etc. - that for most of them the training wheels would eventually come off. I tend to think the latter is true. The proof of this is how many consumers now use Google to do product research.
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