Web 2.0 and Ad Revenue
This week, we met with two companies whose online businesses are primarily driven by ad revenues. As we discussed ideas for optimizing their sites, the same argument emerged: can we take the risk of improving user experience with fewer page views, even if that means a short-term hit to our ad revenue? This debate was especially acute around Web 2.0 functionality, like AJAX-driven mouseovers and dropdown menus that could eliminate journey pages.
In each case, the teams were highly divided on taking a risk on their immediate Q3 and Q4 goals in order to have the opportunity for tangible growth and higher CPM prices further down the road. They could clearly see how using more Web 2.0 features would improve user experience and help them deliver more qualified customers to their advertisers, but were nervous that this improvement would not increase engagement in other areas to the extent that they could make up the lost views on lower CPM ads.
This issue isn’t at all unique to these two marketing departments, but it does provide interesting insights into why a better user experience might be traded off in favor of another objective. As a customer, if you know what you want, your goal is to make your decision and take away the information you need or get through the checkout. If that process takes too long or involves extraneous steps, you're likely to bail out and try another channel. Past OTTO optimization projects have shown that improving experience drives engagement and purchase. However, these gains often involve short-term risk to revenue, and whether or not the losses are realized during the engagement, getting over that hurdle is a significant impediment to improving the customer’s online experience.
We’ll keep an eye on these projects, but please weigh in: how do you manage your desire to innovate with hard revenue targets?
