Presented at DMX-Austria April 6, 2011

1. Experimental marketing:crucial component of a success AndreySebrant, Director, Product marketing Wien, April 2011

2. A few facts about Yandex Over 50 million users a month, around 15 million a day Over 100 million search queries a day Over 64% of search traffic in Russia Over 3 000 employees in 10 offices across fourcountries Over $400 million in revenues last year 2

3. Local players are strongin somemarkets Search market share: Russia (1997) China (2000) South Korea (1999) Czech Republic (1996) Google Other Sources: 1. LiveInternet.ru (Feb2011) 2. Analysys International (Jan 2011) 3. SearchEngineWatch.com (May 2010) 4. Vyhledavace.chose.cz(Nov 2010) 3

4. Russia’s leading search engine Russian search traffic market share, % Sources: LiveInternet.ru (through Feb28, 2011) 1. Based on monthly search traffic to Russian websites from Russian IP addresses 4

5. On a fast growing market Russian search traffic Sources: LiveInternet.ru (through Feb 28, 2011) 1. Based on monthly search traffic to Russian websites from Russian IP addresses 5

6. A very competitive environment What we rely on: Dream team Big math Computing super power Last but not least: a very efficient marketing 6

7. “Digital” means a lot Of course we operate in a digital media, communicate through digital channels We collect so many data that the entire marketing becomes digital in its core 7 It takes many skills to be a pilot, much more than just ability to read devices. On the other hand, if you don’t know how to read them, the landing may be too hard.

8. Marketing is an experimental quantitative science Marketing studies happiness of users and customers. We have to predict what makes them happy even if they do not realize where the happiness is. We study the world (people, products and markets)by creating models and testing them in experiments Models are based on already known facts, observations, intuition and fantasy Experiments or tests are carried out using standard scientific methods 8

9. Product is the king On the Net this is true as nowhere else:- everything is free- all competitors are a few clicks away 9

10. Case study: Churn rate Loss of users may look scary Don’t panic! Analyse this It turns out that users are similar to isotopes; they decay like in nuclear physics Number of users registered during week 1 and visiting the service at least once during each next week 10

11. More about radioactive decay The same percent of users quit service every week Decay rate is characterized by half life, the time taken to decrease the initial amount of users by half If the process is described by the sum of two exponents, there are two groups of users with different half lives In many practical cases the churn rate curve is the sum of two exponential decay curves 11

12. Translation from mathematics to marketing Two groups mean not two isotopes in our case:we observe loyal (long half live) and casual (short living) usersThus, we get quantitative metrics for loyalty which we can measure at the early stages of a new (or re-launched) service. Why is this so important? 12

13. Real-time obsession makes us blind to long-term effects The internet is too fast We all are obsessed with instantaneous measurements- «At the focus group they say…»- «usability tests show…»- CTR is dropping!…And we often forget about life-long relationships with and love of our users ;) 13

14. Churn rate is a good metric for evaluation interface changes or comparing advertizing channels You can measure the effect of interface updates on users’ loyalty. Ideally, the new interface should be tested on a small percent of users. Control group: new users registered in the old interface Test group: new users registered in the new interface Metrics to monitor: ratio of percent of loyal users, ratio of half livesAnd then you can predict the future! 14

15. Churn rate and the budgets (usability vs. advertising) Too much of the ad budgets are a waste  Ad campaign Most advertising campaigns are too far from the ideal, because they mostly attract casual users and very few loyal ones Loyal attracted = 100%,Half life is eternity Loyal attracted= 5%,Half life = 3 15

16. No math, just common sense Before pouring expensive usersinto the website, plug the holes! 16

17. But if you like math… Site audience in a month n depends on the audience of the previous month: Decrease in churn ratecosts money. But usually it’s one-time expense: New users come on their own and thanks to promotion activities: 17

18. Enter the segmentation Different groups of users Different ads Different sources of new users Test and measure responses in each group,test and measure efficiency of every source and adAnd think it all over! 18

19. This still is the most important tool for a marketeer 19 Not only digital things matter

20. Thank you!Спасибозавнимание AndreySebrante-mail: asebrant@yandex-team.rutwitter: @asebrantFB: www.facebook.com/asebrant