18. Morphing Theory and Applications

As electronic commerce often matches or exceeds traditional bricks-and-mortar commerce, firms seek to optimize their online marketing efforts. When feasible, these firms customize marketing efforts to the needs and desires of individual consumers, thereby increasing click-through-rates (CTR) and conversion (sales). When done well, such customization enhances consumer relationships and builds trust. In this chapter we review almost 10 years of morphing experience, including various proofs-of-concept. We start with an overview of the morphing concept and an illustrative example. We then describe how morphing and multi-armed bandits can change the way firms design and run online experiments. We then discuss the analytics of morphing, based on three published papers. We conclude with pratical recommendations for morphing applications, including key decisions, priors and convergence, data, roadmap, do’s and don’ts, open questions and relevant challenges.