Andrey Sebrant presentation at WebIT Conference Sofia, Bulgaria October 2010

1. Experimental marketing:why and how AndreySebrant, Director, Product marketing Sofia, October 2010

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 2 600 employees in 7 offices across three countries Over $300 million in revenues last year 2

3. A very competitive environment What do we rely on: Dream team Big math Computing super power Last but not least: a very efficient marketing 3

4. “Digital” means a lot Of course we operate in a digital media We collect so many data that the entire marketing becomes digital in its core 4 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.

5. 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 5

6. Product is the king On the Net this is true as nowhere else:- everything is free- all competitors are a few clicks away 6

7. Case study: Yandex bar Hypothesis: short search window results in fewer searches because search queries are getting longer Experiment: 50% of new bars have longer window. Tracking: search activity, search queries length Yes, size matters, but not because of the query length… 7

8. 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 8

9. 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 9

10. Translation from mathematics to marketing Two groups mean not two isotopes in our case:we observe loyal (long half live) and casual 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? 10

11. 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 ;) 11

12. Source data: tables of registrations and visits Every week you need a report on how many users registered in previous weeks are still using a service. Also, it’s a useful alerting tool. 12

13. Churn rate is a good metric for evaluation interface changes 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! 13

14. 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 14

15. No math, just common sense Before pouring expensive usersinto the website, plug the holes! 15

16. 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: 16

17. 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! 17

18. This still is the most important tool for a marketeer 18 Not only digital things matter

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