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Online Marketing at Big Skinny Case Study
Bob Monroe 70-451 MIS September 10, 2013

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Image courtesy Benjamin Edelman and Scott Duke Kominers [EK12]
Carnegie Mellon University ©2012 - 2013 Robert T. Monroe 70-451 Management Information Systems

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

Mock-up courtesy Benjamin Edelman and Scott Duke Kominers 70-451 Management Information Systems

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Mock-up co Benjamin Ede Scott Duke K [EK12

Mock-up courtesy Benjamin Edelman and Scott Duke Kominers Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

“Half the money I spend on advertising is wasted; the trouble is I don't know which half.”
Attributed to John Wanamaker US department store merchant (1838 - 1922)

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Sponsored Search Terms Vary Greatly In Cost and Effectiveness

Keyword

Clicks

Impressions

CTR

Avg. CPC

Total Cost

Avg. Pos.

Conv.

Cost per-­‐ Conv.

Conv. Rate

thin wallets leather wallet "thin wallet" "big skinny" "thinnest wallet" thin leather wallet thin bifold wallet

387 103 132 35 81 13 13

16,582 2.33% $0.53 $205.11 1.8 12,335 0.84% $0.59 $60.77 3.2 2,947 2,452 2,188 1,389 423 40 4.48% $0.50 $66.00 1.2 1.43% $0.50 $17.50 1.4 3.70% $0.52 $42.12 1.4 0.94% $0.59 $7.67 3.07% $0.61 $7.93 5.00% $0.38 $0.76 1.6 1.4 1.1

32 $6.41 8.27% 3 $20.26 2.91% 9 5 1 1 0 $7.33 6.82% $3.50 14.29% $7.67 7.69% $7.93 7.69% $0.00 0.00%

4 $10.53 4.94%

thinnest wallet ever

2

Table courtesy Benjamin Edelman and Scott Duke Kominers [EK12]
Carnegie Mellon University ©2012 - 2013 Robert T. Monroe 70-451 Management Information Systems

Carnegie Mellon University

Image courtesy Benjamin Edelman and Scott Duke Kominers [EK12]

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Key Take-Aways?

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Parting Thoughts
• There are many different types of online marketing tools, each with their own strengths and weaknesses • Evaluation and measurement are essential for any marketing effort – online or offline • That said, numbers are rarely enough
– They must be interpreted, understood, and acted upon

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Measure the results! • Evaluation is essential for any marketing effort, online or offline.
– Easy: Sponsored search, A/B testing – Hard: Social media

• Online tools are available. Use them. • It is tempting just to follow your intuition. Resist the temptation.

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Don’t follow measurements blindly
• You may be paying for traffic you would have received anyway.
– Sponsored Search: Bidding on trademark keyword – Distributors: Diverting ads

• Think critically about what measurement systems are really telling you.
– Question the counterfactual. – Non-incremental traffic often looks great.

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Limits to measurement?
• Buy a Google ad, and you can immediately see whether you make a sale. • Improve your web site via dozens of tweaks over a period of months, and it may be hard to know what made the difference.
– Immeasurable? Maybe someone else has already tried, and can tell you the results. – Hard-to-measure improvements can be just as important to long-run success.

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

Stuck? Consider going offline!
Online traffic can derive from offline sources. – Big: Setting a world record – Small: Flyers, QR Codes, … • Offline publicity efforts might fuel “buzz” and incremental, directed search. • But measuring the interplay between offline and online marketing can be difficult.

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

References
[EK12] Online Marketing at Big Skinny, Benjamin Edelman and Scott Duke Kominers, Harvard Business School Case Study 911033-PDF-ENG, Revised February 2012. Images, table, and some concluding slides from [EK12] and supplementary slide resources

Carnegie Mellon University

©2012 - 2013 Robert T. Monroe

70-451 Management Information Systems

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