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Maximizing Satisfaction by Learning while Earning
Gui Liberali Erasmus School of Economics Sloan School of Management, MIT
Website Morphing Algorithms Have Been Published and Generated Quite Some Buzz… • Morphing trilogy (Website, Banner and Time-to-Morph) published at Marketing Science (twice),
Management Science (forthcoming), Sloan Management Review • Discussed in dozens of blogs and magazines
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BT Experiment
• Content areas of home page
• All saw the same landing page
• Each content area present the info differently
Source: Hauser, Urban, Liberali and Braun, 2009
Trick: Match cognitive styles and website characteristics
Cognitive-style dimensions (2 x 2 x 2 x 2) • leader vs. follower • analytic/visual vs. holistic/verbal • impulsive vs. deliberative • active vs. passive
Website characteristics (2 x 2 x 2) • graphical vs. verbal presentations • small- vs. large information load • focused vs. general content
Source: Hauser, Urban, Liberali and Braun, 2009
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Key Challenges Fundamental Problems are general and application
independent (morphs can be sites, products, ..)
• How do we update our beliefs about the cognitive style of each user?
• Given these beliefs, what is the optimal morph (optimal website version? Optimal product to show?)
To keep it simple we will look at an application that morphs sites.
© 2008 MIT Sloan School of Management
Optimal solution with Gittins’ indices (assume we know cognitive style)
Gittins’ indices for the eight morphs.
Morph that was chosen.
0
1
2
3
4
5
6
7
8
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
Visitor
Cho
sen
Mor
ph
0.35
0.45
0.55
0.65
0.75
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
Visitor
Gitt
ins'
Indi
ces
Morph 0 Morph 1 Morph 2 Morph 3 Morph 4 Morph 5 Morph 6 Morph 7
System experiments with Morph 3 for a while before settling back to Morph 2.
Source: Hauser, Urban, Liberali and Braun, 2009
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Empirically-grounded synthetic visitors (normalize profit to 1.0)
Expected Reward
Improve-ment Efficiency Relative
Efficiency No Gittins’ loop nor knowledge of cognitive styles. 0.3205 0.0% 80.4% 0.0% No morphing. Website chosen optimally by Gittins’ loop. 0.3625 13.1% 91.0% 53.9% Morphing: Match characteristics to cognitive style Bayesian inference of cognitive styles (10 clicks) 0.3844 19.9% 96.5% 82.0% Bayesian inference of cognitive styles (50 clicks) 0.3865 20.6% 97.0% 84.7% Perfect information on cognitive styles, Gittins’ loop.* 0.3879 21.0% 97.4% 85.5% Perfect information on style and purchase probabilities* 0.3984 24.3% 100% 100%
*Upper bounds. BT does not have perfect information on either cognitive styles or purchase probabilities.
Source: Hauser, Urban, Liberali and Braun, 2009
Estimated impact for BT Group
• Gen-2 Results – 80,000 visitors – Gittins’ loop alone – find the best static = $52.3 M – 10-click Bayesian loop adds + $27.4 M
– Gittins’ plus Bayesian = $79.7 M – 50-click Bayesian loop adds + $2.6 M – perfect information adds + $1.8 M
Source: Hauser, Urban, Liberali and Braun, 2009
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Website Design Recommendations Morphing Theory relies heavily on website design
Website will morph efficiently when
• It is able to rapidly identify the user style from clicks: we learn style from link choice • It chooses the optimal morph for that style
Designing links • A click is choice among alternatives: if alternatives are different, a click is informative • Design webpages so that are links with different cognitive cues in the same page
Designing Morphs • Best morph for one style should (ideally) be worst for another style • Design various morphs and test them in priming study. Then you can pick the most
discriminating morphs before going live
Source: Hauser, Urban, Liberali and Braun, 2009
For more details
http://people.few.eur.nl/liberali Hauser, J., Liberali, G. & Urban, G (2014). Website Morphing 2.0: Technical and
Implementation Advances and a Field Experiment. Management Science. Urban, G, Liberali, G., Bordley, R, Macdonald, E & Hauser, J. (2014).
Morphing Banner Advertising. Marketing Science, 33(1), 27-46. Hauser, J., Urban, G, Liberali, G. & Braun, M. (2009). Website Morphing. Marketing
Science, 28(2), 202-223
