Are Multi-Variate Testing Systems Under-Priced?

I’ve had a series of conversations over the past few days regarding the distinction I made last November between “behavioral targeting” systems and “multivariate testing” systems. Both types of products tailor Web contents to individual visitors. Both work similarly: place code snippets in slots on the Web page where the personalized content will appear; when the page is loaded, send visitor information to a hosted server; run server-side rules to select the content; then return the selection to the Web page for display. The difference is in how they select the contents.

The testing systems I’ve looked at closely (Optimost, Offermatica, Memetrics) rely on users to define customer segments and assign the contents shown to each segment. They usually assign multiple content items to test their performance. But the systems can also send targeted contents in non-test situations. It’s just a matter of specifying the default contents to serve each segment.

By contrast, the behavioral systems (Certona, Touch Clarity [recently purchased by Omniture], [x+1]) automatically build their own segments. Specifically, they create groups of visitors which are likely to respond to different contents. Thus both the segment definitions and segment-to-content match-ups evolve over time as the system gains more experience and, perhaps, as user behavior evolves.

What was interesting, and frustrating, about my recent conversations was that my counterpart kept insisting that the testing systems do not allow segment-based targeting. He even showed me a recent analyst report that said this. Having personally researched Memetrics and Offermatica and taken a close look at the Optimost Web site, I know this is wrong. Of course, I’ve been around long enough to know you can’t trust anything but your own eyes where software is concerned (and sometimes not even those!) So the misinformation—which I’m certain was unintentional—was no surprise.

More intriguing was the realization that sophisticated testing systems could probably charge more if they positioned themselves as targeting tools. Apparently the prices for behavioral targeting products are higher—perhaps because at least some of them base their fees on incremental profits earned for their clients (I know Certona does this). Maybe the testing systems are missing other functions needed for targeting. But if they really could raise their fees by repositioning themselves, it looks like a missed opportunity.