An alternative approach to product development.

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With around half the world now connected to the internet adding up to over 3 billion individual users, the growth in online digital touch points continues to grow apace. 60% of purchases are now done online bringing technology and content into central importance. This is making it both necessary and possible for companies to yield new insights into online interactions through a process known as digital experimentation.

It is a common assumption that the bigger the investment, the more substantial impact you will see. However, the online world has changed that and success of different types of digital marketing is much more likely to be found in small iterative changes rather than big and disruptive changes. The good thing about this change is that it makes the failure of new ideas both less costly and more rewarding. As the old saying goes, ‘I’ve learned so much from my mistakes, I’m thinking about making a few more’.

Just as John Wanamaker, the pioneer of the marketing firm, lamented over a century ago “half the money I spend on advertising is wasted; the trouble is that I don’t know which half”, mistakes and failure have always been a vital cog in our ability to learn and improve but have not always been able to be fully harnessed. Since around one-third of ideas have positive effects, one third have a neutral effect, and a further third have adverse effects, the ability to cheaply experiment with everything is a wonderful opportunity. By testing every idea first, bolder changes can be made without the risk associated with new products and initiatives.

One of the most exciting things about implementing a culture of experimentation is its ability to unleash creativity.

Rapid Iteration

This has led to a move away from decisions based on historical data, to making fast-paced decisions on live data making it possible for businesses to become more agile in their approach to business development. Fundamental to the new approach is fostering a culture of experimentation and innovation.

Whether you want to test ideas, images, graphics or pricing, digital experimentation helps you turn questions into solutions. Ultimately, experimentation is the next big thing in business management and needs to be at the core of how businesses engage with online spaces. If companies engage properly with digital experimentation, then they will unleash the potential of learning from failures that will enable them to build better products, increase their growth more rapidly and expand their profitability.

Through fostering experimental cultures, businesses unleash the potential of their teams and make it possible to come across the right questions and the right solutions through a process of iterative failures which will shed light on pathways to success.

This process works

Back in 2012 an idea to change how Microsoft Bing displayed advert headlines got left on the scrapheap for some time as there had been so many suggestions made. However, after some months an engineer noticed this idea would only take them writing a few lines of code to implement and undertook a controlled experiment using a simple A/B test, where one user views the page one way and another view’s it in the new way.

Within just a few hours of setting up the new headline, abnormally high revenue was being received with an increase of 12%. This equates to $100,000,000 if continued over a full year and made it one of the greatest ideas in terms of revenue generation in Bing’s entire history. This example serves to highlight the difficulty in always being able to recognise the best idea or define a problem that is holding back business.

Also, it highlights the need to expand the number of tests that are carried out if you are going to make the best of the tools your company has at its disposal. Fortunately, digital experimentation allows you to do this cost effectively and on as big a scale as you have digital reach. Companies like Google, Amazon, and Facebook carry out thousands of controlled experiments online every year involving millions of users.

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