2016: Five predictions for the conversion optimization industry

Every January for the last five years, I’ve thought to myself: “This year is the one when conversion optimization will become mainstream.”

Not just another process that’s occasionally bolted on to marketing or web design – but a mindset that’s core to how every company operates and grows.

But it’s never quite worked out like that.

Conversion optimization has come a long way: data-driven companies like Facebook are leading the way, and more companies than ever are embracing testing. Conversion optimization has become huge business: not just for the brands who embrace a “test and learn” philosophy, but also the software and service companies that support them.

But there’s still a long way to go. Here are my predictions for the year ahead…

“Most brands are still redesigning their websites on a 3–5 year cycle”

We’re not a fan of redesigns. They’re typically unfocused, unmeasured, “best practice”-riddled disasters – and the antithesis to the concept of continual improvement that we promote. (That’s why our creative team don’t do redesigns – they focus on tests instead.)

It’s been two years since Marks and Spencers famously botched their redesign. It cost them £150 million and lowered their sales 8%.

But they won’t be the last – most brands are still redesigning their websites on a 3–5 year cycle. Meanwhile a company like Amazon continually optimizes, tests, iterates – without ever really appearing to ”redesign”.

“Personalization can become a brand’s competitive advantage.”

I have a love/hate relationship with personalization.

It offers a huge opportunity to companies with a strong foundation of split-testing.

But if you don’t have this foundation – if you don’t know which user segments to target, what motivates them and what stops them – then you risk forking your website and creating multiple suboptimal experiences.

But personalization can and should be huge – both for brands and the software vendors that support them.

For brands with a mature testing program, personalization offers a way to drive even more value from every visitor. They already know from their A/B tests that their visitors behave differently: some will respond positively to a test, while others may be neutral or negative. Personalization offers a way to fix this – and opens up huge new opportunities for growth.

Most importantly, it can become a brand’s competitive advantage: while a competitor may be able to learn from or copy your website’s testing, they can never fully discover your personalization strategy.

Likewise for the testing platforms themselves, they will live or die by the success of their personalization offering. A/B testing platforms are all based on the same premise – and it’s easy to switch out one with another.

But personalization offers a huge opportunity for software vendors. They can differentiate with the sophistication of their platform, its ease of use, and potentially the AI that supports it.

And most importantly for software vendors, it’s difficult to swap one personalization setup for another: the more data they collect, the more complex the setup, the more value they add, the harder it’ll be to move away from – and the more they can charge.

“Google’s biggest opportunity is to create a full-funnel testing platform.”

Some time in 2016, Google will publicly launch a testing platform that will disrupt the market.

It was ten years ago that they launched Google Website Optimizer – allowing anyone to A/B test, without a five-figure monthly pricetag. GWO has since been retired – replaced by a much weaker product, Content Experiments – but all that is set to change.

Google’s new testing platform is rumored to be in beta, and its release is set to disrupt the market. At minimum, it’ll bring a huge amount of interest and attention as more people discover the opportunities for optimization.

But we don’t know yet whether it’ll be a “me too” product – possibly with some additional features (like Content Experiments’ multi-armed bandit model) – or whether it’ll be a game changer like GWO was ten years ago.

Google’s biggest opportunity is to create a full-funnel testing platform: spanning acquisition, conversion and analytics. They have a huge competitive advantage – Google has the market share on analytics and online advertising. With two-way integrations for both, they can not only bring more people to testing, they can also bring the rigor and theory of optimization and testing to online advertising.

Right now, conversion optimization and testing is focused on websites – but brands are spending 99x as much bringing traffic to their website as they are on optimizing the website itself. Google is perfectly positioned to take advantage of this.

“There are opportunities throughout the funnel: from advertising through to CRM.“

The concept of testing and continual improvement isn’t unique to conversion optimization. What’s interesting is how conversion is starting to have an impact on complementary disciplines – like SEO and PPC.

This has already started. In January 2015, Pinterest posted about their success with split-testing for SEO. Then in December, Distilled announced a server-side solution for companies looking to split-test their SEO strategy. Meanwhile in PPC, Brainlabs have developed A/B Labs, allowing you to split-test campaign structures, bidding software and even different PPC agencies.

In 2016, this will gather pace. There are opportunities throughout the funnel:

• At the top of the funnel, advertisers can leverage the insight and process of website optimization. By analyzing the same qualitative data that informs testing on the website – as well as the content that is proven to motivate users – advertisers can create more appealing, persuasive creative. Then, they can increase the sophistication of their ad testing: not just in PPC, but even TV and outdoor – traditionally untested campaigns that would fall into the category of “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
• At the bottom of the funnel, brands can increase customer satisfaction, loyalty and lifetime value by again leveraging the insight and process of website optimization. By understanding the principles that motivate users to become customers – and by applying principles of testing to CRM – brands can test and optimize every customer touchpoint.  

“Optimizely have the market share in optimization, and the investment to push heavily on personalization.”

If the predicted “softening” of the tech market allows, we’ll see one of the pureplay testing and personalization vendors preparing to IPO.

The prime contender is Optimizely. They have the market share in optimization, and the investment to push heavily on personalization.

There’s a chance they could be an acquisition target instead. Interestingly, as of October 2015, Salesforce Ventures is hedging its bets with investments in both Optimizely and Qubit. (It’s only been a few months since Maxymiser was acquired by Oracle in August 2015.)

Any IPO or acquisition will depend on the success of either company’s personalization offering – as above, their monthly recurring revenue can increase exponentially if they get it right.

If you want to make these ideas a reality – and help brands exploit the potential of optimization and personalization – please look at our careers page!