Business Analytics Capstone Framework for Strategy · • Option 3 –Focus on native ads The anticipated effect on customers: As mentioned in my strategy slides, native ads are far

Business Analytics Capstone Framework for Strategy

Riddhesh Raval

Date: April 23rd, 2016

Strategy

StrategyAssumptions

My recommended strategy will have agility and will have reliance on the results of the initial root cause analysis(Refer Problem Statement). As at this stage of

analysis, we won’t be able to collect and analyze real data, hence I would make the following assumption based on secondary research:

1. Yahoo’s objective is to improve revenue and profitability in online advertising segment – as an advertiser and publisher

2. Consumers are using Adblocker programs for several reasons. For mobile users performance issues, data usage and annoyance are major cause of concerns. On the

other hand, Desktop users are annoyed because of the performance issues, security and intrusive nature of the ads.

Options:

Based on assumption and proposed objectives, I evaluated several options to fight the Adblocker problem. Here are some of the options yahoo can pursue:

1. Fight the Adblockers – Yahoo can take a stand against all Adblocker programs. There are several ways yahoo can into the war with Adblockers. Lets start

examining them one at a time.

StrategyOptions 1- Fight Adblockers

Pros Cons

Might get immediate success – will be able to mitigate Adblockers

Adblocker will retaliate by developing technology to neutralize gains

Short term revenue boost, might result inrise in stock price

Highly risky as retaliation from Adblockers will nullify investments – can loose money on R & D. Can not be a feasible solution for long term.

Risk of losing consumers for ever as a publisher. Other Ad companies might eat into the market share.

Develop Technology to fight Adblockers

StrategyOptions 1- Fight Adblockers

2. Work with Adblockers

Pros Cons

Developing proprietary eco system will guarantee an Adblocker free

It will be challenging to get buy in and win audience. You will need really appealing content, information

Highly risky. Very difficult to predict response from consumers

Develop applications - serve adds on your own applications(Mostly for Mobile)

StrategyOption 1- Fight Adblockers

Pros Cons

Might get immediate success – will be able to mitigate Adblockers

Programmers will be will be encouraged to develop Adblockers as Adblocker companies will be able to get attractive price for their programs.

Short term revenue boost, might result inrise in stock price

Can be very expensive strategy. Might not be sustainable.

Buy Adblockers

StrategyOptions 2 – Work with Adblockers

2. Work with Adblockers

Pros Cons

Might be able to mitigate risk of Adblockers Revenues and type of content will be controlled by Adblockers as they will be able to dictate terms to be whitelisted.

Get access through adblocker programs

Might adversely impact brand if not careful about content. Consumers might get annoyed and switch to another Adblocker programs

StrategyOptions 3 – Buy in from consumers

3. Buy-in from consumers. Create meaningful and value added experiences for end user.

Pros Cons

Might be able to mitigate risk of other Adblockers

Difficult to win consumers.

Relevance will improve efficiencies. Relevance and respect will impact revenues

Develop your own Adblocker program – Empower the user

Pros Cons

Focusing on native will improve performance. Research suggest that native ads are about 40% likely to be clicked than display ads

Heavy focus on native can affect revenues negatively.

Improve user experience – focus on native ads



Pros Cons

Adds overall value to the user experience Developing and analyzing consumers could be very challenging task

Improve user experience – Annoyance. Use analytics to your advantage1. Segment users based on broad interests, demographic, geographics2. Identify most valuable consumers – categorize consumers and provide them with

different level of empowerment tools.

Serve Segmented, contextual and customized ads



Pros Cons

Improves performance, reduces data usage Revenues might be affected due to stringent ads guidelines for improved performance

Improve user experience – Performance and Data usage(Mobile users)1. Improve bandwidth usage, optimize ads to improve performance on mobile

platforms2. Devise a data usage compensation plan if feasible(Calculate ROI). Work with cell data

providers



Pros Cons

Improves performance, reduces data usage Revenues might be affected due to stringent ads guidelines for improved performance

Improve user experience – Performance and Data usage(Mobile users)1. Improve bandwidth usage, optimize ads to improve performance on mobile

platforms2. Devise a data usage compensation plan if feasible(Calculate ROI). Work with cell data

providers

StrategyRecommendations

To address Adblockers problem, I recommend to go with a hybrid strategy. Option 2 of the strategy will provide yahoo with a short term solution where it should

partner with biggest Adblocker programs to maintain its revenue in near future. On the other hand, option 2 is not a sustainable strategy. As a result, yahoo should

start working on option 3, where it can improve user experience by working with industry partners, develop innovative solutions and plan for long term profitability

and success. By combining, option 2 and option 3, yahoo will be able to whether short term and long term challenges.

Effects and Measurement

Effects and MeasurementDescribe the anticipated effects of your strategy and how you will measure them

As I have recommended option 2 and 3 as my strategy, I will describe anticipated effects and measurement methods for each of the strategies separately.

• Option 2 – Work with Adblockers

While yahoo can keep working on suggested recommendations of option 3, it will require an immediate and short term solution to the problem. By

working with Adblockers, yahoo will be able at least slow down the revenue deterioration. For the experimental phase, yahoo should identify one of the most popular

Adblocker program and should partner with them to conduct the experiment.

How to measure the effects on consumers and revenues:

1. We need to run an experiments to measure the effect of the strategy. We need to identify a sample population.

2. Only, Adblocker program users can be the part of this population. To clarify, population members must be the users of an Adblocker program as we need to

establish a causal relationship with Adblocker usage.

3. Let's start with period 1 experiment. Once, population has been identified, Yahoo should measure ad revenues of this population over a short period of time.

4. For the second period, yahoo should work with partner Adblocker. Adblocker will allow yahoo network ads to be served to the user. The experiment should run

for the exact same time as period 1 experiment. Yahoo needs to collect revenue data as well as consumer churn rate of the Adblocker program. (Adblocker churn

rate should be calculated with the help of partner Adblocker)

5. We should repeat the experiment with several other sample populations. If we can repeat the results with a few more similar experiments, then we will be

confident that Adblocker has an impact on yahoo revenues.

Interpretation of results: After monitoring revenues for a two periods for several populations, if the two period revenue numbers are different then….

1. We can safely assume that Adblocker was the cause for the revenue change as we have controlled the experiment by maintaining all other aspects of the

experiment identical, except for the second period when Adblocker will allow yahoo ads to be whitelisted.

2. We should be able to measure the ROI of the project for 2 year horizon.


• Option 3 – Empowering users – Develop your own Adblocker program

The anticipated effect on customers: Customers will sign in the free ad blocker program. The program should allow the users to customize their own ad experience based on their preferences. With ability to control their own ad experience, users will feel empowered. It will improve the overall consumer experience with relevant ads.

The collected data could prove vital for later stages where we want to improve the consumer experience by creating models to serve unique user experience.

How to Measure:

Once, the Adblocker program is available, yahoo should start measuring

1. User (Of yahoo Adblocker) satisfaction with surveys

2. Number of users signing in for yahoo Adblocker (Measuring Trend and popularity)

3. Comparing revenue impact with A/B testing - A group with yahoo Adblocker and without Adblocker .

4. Measure change in churn rate (If a user signs to a different Adblocker)

Interpretation of results:

I will describe the results of each measurement in the same order.

1. User surveys will provide an insight into Adblocker program. By collecting the data, yahoo will be able to improve Adblocker program. Yahoo will have a clear understanding of what is working and what is not working.

2. The speed of adoption will be a key to adjust the promotional spending for yahoo Adblockers. In the areas, where the adoption rate is low, spending could be boosted up.

3. Even though it seems obvious that adopters of yahoo Adblocker will improve revenues for yahoo, measuring change in revenue or the bottom line per additional user will go a long way. For example, if an additional user boosts up overall revenue of yahoo by $10 / month, yahoo can make a decision on resource allocation for the project. Eventually, the ROI of the project should be calculated.


• Option 3 – Empowering users – Develop your own Adblocker program

4. Looking at the churn rate, yahoo will be able to estimate the popularity of the program. If the churn rate for the yahoo Adblocker is high, yahoo should collect data to understand why a user is uninstalling yahoo Adblocker.

• Option 3 – Focus on native ads

The anticipated effect on customers: As mentioned in my strategy slides, native ads are far more effective than display ads. As native ads are context based, users will find them less intrusive and sometimes interesting enough to be clicked. In sum, native ads will improve the overall consumer experience.

How to Measure:

1. By focusing on native only ads, yahoo should measure revenues and profitability of the native ads per user (Or may be per 100 users). By calculating opportunity cost and revenue impact of native ads, yahoo should find a revenue maximizing ratio of native ads s display ads. The experiment should be conducted as an A/B testing where for one period a population of users will be served with native ads only. For the second period the users will be served display ads only. The user population can be randomly selected.


If yahoo can estimate the opportunity cost of native ads, then it should find a better fitting ratio, for display and native ads to optimize profits. By using customer analytics, each user will be served with a profit maximizing combination of display and native ads.


• Option 3 – Improve user experience – Annoyance, data usage. Use analytics to your advantage

1. Segment users based on broad interests, demographic, geographic

2. Identify most valuable consumers – categorize consumers and provide them with different level of empowerment tools.

3. Improve bandwidth usage, optimize ads to improve performance on mobile platforms

4. Devise a data usage compensation plan if feasible (Calculate ROI). Work with cell data providers

The success of this strategy option is highly dependent on quality of model yahoo can build. The personalized user models should be built, applied, experimented and

tuned to get the best results. As mentioned above in point 2, most valuable users will get the most personalized experience and care. For example, yahoo can categorize

ads into various quality categories and those will be served to the most valuable users. On mobile platforms, users will be offered compensation in terms of additional

data usage from wireless partners to compensate for any mobile data usage. The amount and frequency of such compensation should be based on CLV (Customer

lifetime value).

Anticipated effect on customers:

The above strategy is user centric and is geared towards delivering enhanced user experience. With various levels of empowerment tools (based on customer lifetime value)

The consumer will feel empowered and in control. Overall, the idea of this strategy is to improve profitability and revenues along with user experience. It seems quite challenging; however, with the use of customer analytics, yahoo can achieve all of the three at the same time.

How to Measure:

1. Click through ratio should be measured to evaluate personalized models. Based on the feedback, the personalized models should be tuned to deliver better results.

2. Measuring Customer Life Time Value is challenging. Yahoo should use historical click and buy data, and average online usage statistics for estimating customer lifetime value. It is the most important estimate for personalized user models, it should be done as precisely as it can be.

3. Once, the required models have been tested and evaluated sufficiently, the revenue impact should be measured for all of the 4 points individually with A/B testing.


• Option 3 – Improve user experience – Annoyance. Data usage. Use analytics to your advantage


After collecting revenue and profitability numbers for each strategy point, yahoo can identify opportunities and deficiencies. All of the 4 strategies should be tuned to work together to deliver the best results. At the end, with collected data, yahoo should be able to clearly identify most valuable strategy or strategies and keep improving them.

Documents

Business Analytics Capstone Framework for Strategy · • Option 3 –Focus on native ads The anticipated effect on customers: As mentioned in my strategy slides, native ads are far