Wien, April 2011

Experimental marketing:

crucial component of a success

Andrey Sebrant,

Director, Product marketing

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 four countries

· Over $400 million in revenues last year

2

Local players are strong in some markets

Sources:

1. LiveInternet.ru (Feb 2011)

2. Analysys International (Jan 2011)

3. SearchEngineWatch.com (May 2010) 4. Vyhledavace.chose.cz

(Nov 2010)

Russia (1997) China (2000) South Korea (1999) Czech Republic (1996)

SEARCH MARKET SHARE:

Google

Other

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65%

22%14%

Russia’s leading search engine

RUSSIAN SEARCH TRAFFIC MARKET SHARE, %

Sources: LiveInternet.ru (through Feb 28, 2011)

1. Based on monthly search traffic to Russian websites from Russian IP addresses

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YandexRamblerSearch Mail.ruGoogle

On a fast growing market

Sources: LiveInternet.ru (through Feb 28, 2011)

1. Based on monthly search traffic to Russian websites from Russian IP addresses

RUSSIAN SEARCH TRAFFIC

5

Sep-

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Dec-0

5

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6

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YandexGoogleSearch.Mail.ruRambler

A very competitive environmentWhat we rely on:

· Dream team

· Big math

· Computing super power

Last but not least: a very efficient marketing

6

“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

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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.

Marketing is an experimental quantitative science

· 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

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.

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Product is the king

On the Net this is true as nowhere else:

- everything is free- all competitors are a few clicks away

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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

1 2 3 4 5 6 710000

60000

110000

160000

210000

260000

310000

360000

Number of users registered during week 1 and visiting the service

at least once during each next week

1 2 3 4 5 6 710000

100000

1000000

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1 2 3 4 5 6 7 8 9 1010000

100000

1000000

f(x) = 59124.6973627865 exp( − 0.0601795024074681 x )

f(x) = 1266549.80801432 exp( − 1.34140485938932 x )

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

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Translation from mathematics to marketing

Two groups mean not two isotopes in our case:we observe loyal (long half live) and casual (short living) users

Thus, 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?

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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 ;)

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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 lives

And then you can predict the future!

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Churn rate and the budgets (usability vs. advertising)

Too much of the ad budgets are a waste

Loyal attracted = 5%,

Half life = 3

Ad campaign Most advertising campaigns are too far from the

ideal, because they mostly attract casual users

and very few loyal onesLoyal attracted = 100%,

Half life is eternity

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No math, just common sense

Before pouring expensive usersinto the website,

plug the holes!

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But if you like math…

Site audience in a month n depends on the audience

of the previous month:

NCAA nn )1()1()(

($)newnat FNN )1;0(

($);

c

cmaх

G

GCC

New users come on their own and thanks to

promotion activities:

Decrease in churn rate costs money. But

usually it’s one-time expense:

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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 ad

And think it all over!

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This still is the most important tool for a marketeer

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Not only digital things matter

Thank you!Спасибо за внимание

Andrey Sebrante-mail: asebrant@yandex-team.rutwitter: @asebrantFB: www.facebook.com/asebrant