Sunday 11 October 2015 9:35 pm

Optimal climate for success: House of Kaizen’s David Shiell talks Australian luddism and CRO

Over the last few years, conversion rate optimisation (CRO) has been seen as a silver bullet for a company wanting to leverage existing web traffic and increase revenues, at a relatively low price.

CRO is about maximising an audience’s engagement with an advert, but the process itself is exceedingly complex, as David Shiell, chief executive of digital performance marketing company House of Kaizen (HOK), knows all too well. “We had been talking to Google, which recognised that CRO was the only way to encourage clients to increase their incremental spend. And naively, we threw ourselves into it.” 

Having started his advertising career working with TV and print, leaving his native Australia and traditional media to immerse himself in online as it was coming to the fore in 2000. Settling in the UK, it wasn’t until seven years ago that the opportunities of CRO presented themselves to him. Shiell tells City A.M. why it is the future of digital marketing. 

Why did you move from Australia to forge a career in online advertising? 

Around the millennium, there was a reluctance among Australians to embrace the internet. The US was pumping money into Silicon Valley, but it wasn’t until the mid-noughties that Australians got the confidence to even book their own flight or bank online.
Back in 1999, I was working for Mindshare, developing a strategy for Kodak, which was launching a CD-Rom for storing photos. The strategy I pitched was 99 per cent TV and press, with a small amount dedicated to the online space, which had a small following. Kodak’s board told my boss that we had no business coming to them with this and it needed to be completely redone. I resigned and moved to the UK, to work entirely in the online space. And we all know what happened to Kodak. 

Why do you think CRO is so important? 

It is tempting for marketers to go for the low-hanging fruit – to spend more on marketing and media, driving traffic with an expensive initial advert and pushing it through paid media channels. However, after you’ve clicked on an advert and you’re sent to “the landing page”, the consumer doesn’t get exactly what they expect – perhaps the headline is different or the value proposition is not there. Audiences are easily put off. Indeed, 80 per cent of audiences who visit a website leave within three seconds, so you need to hedge your investment by optimisation.
We look at the key killers of cognitive drivers, to understand why a website visitor clicks away. CRO can help marketers understand what the expectations of a visitor to their website are, how the visitor interacts with the various elements on the page, by using website analytics, interaction monitoring and mindset analysis. We can then narrow the gap between what a visitor anticipates and what they get. 

Why is it so difficult to master? 

CRO is about crafting a consistent storyline – from the first advert to the landing page, through the sales funnel to reach the final conversion. But there are so many interdependent optimisation stages occurring simultaneously, with different disciplines required to understand them, from research analysis, to design and coding. At the beginning, we thought it was about technology, but it’s all about methodology, your strategy for understanding the consumer. In many ways, we’ve moved from being a digital marketing agency to a behavioural sciences company. Most of the tech we use is available in the marketplace. It’s just our processes which are carefully honed. 

Why is it cost effective for a client? 

On its own, media won’t give you incremental revenue increases in the long term. And CRO is quite cheap compared with a marketer’s overall spend. Apportioning just 10 per cent of your budget can noticeablely boost your bottom line. HOK regularly achieve 100 per cent plus conversion rate increases, so marketers should think of CRO as de-risking their ad spend. 
When appropriate we take full control of a client’s media, bearing all the cost of our services, and taking a cut of revenue instead of fees. We do this with Intel Security, and have a hybrid fee model set up with Avis Budget Group, consisting of a retainer and commission, which we can reinvest in to the model to deliver larger audiences. We’re no longer beholden to a marketer’s budget, which may be cut, and the client can focus on diverting marketing expenditure elsewhere such as longer term capital hungry projects, without worrying about paying our fee.