A-B Testing And Online Advertisements
To truly appreciate the benefits of A/B testing, it is important to understand how this relates to paid advertisements. Despite the recent marketing push for free marketing (social media, blogging, etc.) businesses have traditional become successful based on the positive spread they have between the value of the purchaser and the cost to acquire that customer. For example, if you can pay $2.00 on Google Adwords to bring a visitor to your website and on average, the value of every visitor is $4.00, then on average for every visitor you will receive a profit of $2.00. Multiplied to a large extent and you have created a successful business.
Now, examine what will happen if the cost to bring in each user ($2.00) is higher than the value of the visitor ($1.50). Unless you go through free marketing channels (social media, blogging, etc.), you will have a broken business model. If you decide to pay for advertising, you will continue to lose money until your company runs out of cash.
However, if you optimize your website and focus on funnel optimization and A/B testing, you can dramatically increase your conversion rate. If you can increase you conversion rate by 100%, then the value of each visitor will double to $3.00 and your business will again be profitable. By optimizing your website with A/B testing, you may not even need to focus on other parts of your business to become successful.
These marketing channels that you would have lost money on are now profitable channels. Your business can now be scaled.