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Wednesday, November 27, 2013

On A/B Testing and Better Experimental Design

In Wired:   On the well known method of A/B testing.   It is one of the simplest experimental designs, but is sometimes not good enough.  A example of the model being inappropriate to the need of the decision.  The use of more general  'experimental design', is also well known,  and hardly a new statistical method.  

" ... Recent advances in statistical methods and analytics have given marketers a far more powerful and sophisticated technique through experimental design. Experimental design works best with companies that market directly to a large number of customers, such as telecommunications firms, banks, online retailers, and credit card providers.

Experimental design massively and deliberately increases the amount of variance in direct marketing campaigns, allowing businesses to project the impact of many variables (product offers, messages, incentives, mail formats, and so on) by testing just a few of them. How? Mathematical formulas use combinations of variables as proxies for the complexity of all the original variables. ... " 

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