A/B testing or split testing is currently being used for by internet marketers for conversion rate optimization. That's the process of improving a website's or landing page's experience in order to convert more visitors to perform a desired task (such as signing up for an account).
Indeed split testing can be used by publishers for ad revenue optimization (the process of striving to increase online advertising revenues). For example, if a website serves cost-per-click-based ads, any legitimate way to improve the click-through-rate (such as changing an ad's location) can help multiply revenues for the website.
Related: 9 Mistakes Killing the Success of Your Pay-Per-Click Advertising
Here's a little history: In 1993, display advertising took a huge leap forward when the first clickable web banner was sold by online information portal Global Network Navigator to the law firm Heller Ehrman White & McAuliffe.
Soon enough, when the team at Hotwired (one of the first commercial web magazines) was looking for ways to pay its writers, the idea of selling online ads arose and the term banner advertising was coined. The first banner ad on the Hotwired website was sold to AT&T, which used it to promote its campaign “You will.”
Can you guess the click-through rate it produced?
A whopping 44 percent!
Web publishers work really hard to produce quality content and in many cases depend on display advertising as a source of revenue. The sad truth is that over the last 15 years display advertising has witnessed a constant decline in click-through rates. The average click-through rate has recently hit 10 percent, and in countries like Finland it stands at 0.05 percent.
With A/B testing being deployed for conversion rate optimization, products such as a Visual Website Optimizer and similar ones have been developed to address the needs of internet marketers.
Related: Who Should Use Pay-Per-Click Advertising and Who Shouldn't
Publishers as a segment have yet to fully tap split testing. Online publishers, especially those who rely on cost-per-click-based ads, could therefore be missing out on a large opportunity for improving their ad revenues by using testing and optimization.
Ad networks try their best to help publishers by making advertisements more relevant and targeted to website visitors (which helps improve the online experience and click-through rates) but have no control over the last mile of the road: the publishers' websites.
A/B testing can help online publishers test and compare different ad units. It may come as a surprise but small changes in a publisher's ad units in these four areas can lead to big changes in click-through rates: 1) ad placement and location 2) ad size 3) ad type (image vs. text) and 4) ad theme (text color, background color, border vs. no border)
Subtle changes related to an ad's location can take a publisher a long way. I once worked with the owner of a popular blog to move a 200×200 unit from the left column of the page to the right side. For two weeks after the shift, this small change led to a 72 percent increase in clicks over the other ad unit.
Darren Rowse of Problogger.com often performs split testing on his blog. During a test, he saw that his left-aligned ad scored a click-through rate that was 66 percent higher than its right-aligned variation. This goes to prove that no two sites are alike.
In a test for on a publisher's website run by Google, the AdSense team replaced a 120×600 skyscraper ad with a 160×600 wide skyscraper ad and swapped another 468×60 banner for a 300×250 medium rectangle ad. These two changes led to a 109 percent increase in AdSense revenue for that website.
Ad revenue optimization needs to be a continuous process. A big difference between conversion rate optimization and ad revenue optimization is that when optimizing for conversions, one creates a few variations, runs some tests and there's a winner by the end of the experiment.
When testing different ad units (by ad sizes, types, locations and theme), the winner today will not necessarily be the winner tomorrow. This is because of a phenomenon called banner blindness. An ad unit that performs great today may not do so next month. This is why we need something called continuous optimization.
If you are an online publisher, blogger or webmaster monetizing your website through cost-per-click-based ads and haven’t started optimizing your ad units, it may be a good time to start.
Related: The 7 Secrets to Shareable Content