Recommendation Engines and Internet Marketing: The Power of Suggestion

Internet Marketing September 6th, 2007

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Recommendation

After my first introduction to recommendation engines, I could not help but wonder, how can recommendation engines work for online marketing?

We have all experienced the old-fashioned up sell.  Whether its gravy on your fries, extra cheese on your sandwich, or the extra large popcorn at the movie’s, none of these up sells would be possible, if the sales clerk didn’t already have knowledge of the product you were intending to purchase. Now, let’s take this concept of  up-sell a little further.

Imagine walking into a restaurant and having the server offer you a side of gravy when you ordered a Caesar salad, this may seem odd. But what if the server knew that 7/10 people who ordered Caesar salad not only ordered a small fry, but six of those seven also ordered gravy, and that in offering you gravy, you discovered that not only did you want gravy, you wanted  the fries that go with it.

Upsell’s are a more primitive form of product suggestion, a concept that has a long history, and with the advancements in online technologies such as recommendation engines, is experiencing advancements in the present, and is expected to continue to have a lucrative future.

Recommender systems are information filters that profile and compare reference characteristics from an internet user’s content searches, or social environment. When building a user profile, distinctions are made between explicit and implicit forms of data, comparing this data with data collected from other similar profiles. The recommender engine will then calculate a list of recommended items, and present them to the user. (ever bought off of Amazon?)

Recommender systems differ from search engines, in that a search is what you do when you’re looking for something, while recommender systems are about discovery, a useful alternative to search algorithms, helping users discover items or services they may not have found on there own.

According to Forrester Research analyst Sucharita Mulpuru, last year consumers spent $220 billion dollars online, with recommendation engines accounting for 10 to 30 per cent of the spending. This 10 to 30 per cent is referred to as the “discovery market,” which is proving to be very lucrative. Todd Humphrey, CEO of CleverSet, claims that the 75 online retailers using his engine are averaging a 22 per cent increase in revenue per visitor.  Do you know of a better way to increase your revenue by 22%?

What does does this mean to your internet marketing campaign?

Internet marketing helps bring traffic to your site, while using recommendation engines, in unison with your internet marketing campaign will yield rapid sales conversion improvements, according to Tod Humphrey a 22 per cent yield in revenue per visitor.

Remember the term — whether it stays the same or morphs into another name, recommendation engines will play a vital role in online marketing as it did for department stores when that teenage girl asked you if you wanted to buy a belt to go with your pants.

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