Probabilities, Statistics & Internet Marketing
How To Bet on #8 in Vegas?
Carefully. Vegas preys on the reptilian part of our brain, which can be dangerous. To overcome it requires understanding and the application of probability and statistics.
The advance determination of the odds of a defined outcome happening is the realm of probability. Much of probability is absolutely counter-intuitive to the auto-response (reptilian) part of our brains. Fortunately, it is possible to establish accurate data by using the more advanced, analytic part of our brains.
Measuring and tracking results after an event occurs is the realm of statistics.
Which brings us to Las Vegas and betting on #8 …
But it’s perfect timing to find yourself in Vegas. You have a sense the number 8 is really lucky for you today. You were born on August 8 at 8:08am. Your social security number ends in 8888. Your phone number ends in 8888. Your address is 888. And today is 8/8/08! Hard not to go into a casino with a few bucks (you decide $300 is plenty) and try your luck. So at 8:08PM you walk into the casino.
OK, you’re not an expert gambler. You just want to bet on #8. You’ve heard that roulette tables are a ripoff so you walk past those to a craps table There’s a large red 6 & 8 stamped into the felt at each end of the table, called the Big 6 & 8. You ask one of the craps dealers how that works and he explains that if you bet on either the 6 or the 8 and it comes up on a roll of the dice before a 7 then you win an amount equal to your bet.
Well, you don’t care about the 6, but you just know that this is an 8 crazy kind of day. So you give the dealer your $300 in cash and he gives you $300 in chips. You’ve decided to divide it into 10 bets (you’re prudent, after all) and so you place $30 worth of chips on the Big Red 8. The shooter rolls the dice and one die shows a 5 and the other shows a 3 - it’s an 8 - you win! The dealer smiles and places $30 worth of chips next to your original $30. Great start. A cocktail waitress comes over and asks you what you’d like to drink, on the house of course. Life is good.
This goes on for several hours. You win some, you lose some. It’s getting late so you decide to call it quits. When you turn in your chips you’re pleased to get $390 in cash, which means you’ve won $90. Since you always bet the same amount, winning $90 means that you won three more times than you lost. Not too bad after dozens and dozens rolls of the dice, but 8’s are lucky.
But maybe the luckiest thing is that you’re unaware that you left $330 on the table.
You should have winnings of $420. No, you picked up all of your chips. And yeah, your 8 was lucky, so betting on that worked out well. You just bet on it the wrong way. You could have stood in exactly the same place and bet on 8’s in a way that when you won you would be paid $35 instead of $30. While the casino doesn’t have any BIG RED 6 & 8 printed on that spot, it does say “Place Bets” with a big yellow 8 on the green felt. But you can’t set your chips there yourself, you have to ask the dealer to place them for you. The easy bet exploited you with one of the worse sucker bets in Las Vegas (In Atlantic City you don’t have to worry about Big 6/8 - they’re not even on the craps table there).
An increase of over 350% in winnings ($330) for having your chips placed on the same number a foot away? Only inches separating one of the worse bets in Vegas with one of the best? Why didn’t the dealer explain that to you? Maybe that’s why he was smiling. Calculations are here.
Which brings us to Probabilities, Statistics & Internet Marketing…
Your situation with your internet marketing budget is similar to what you experienced with the 8’s (except you have much better odds than in Vegas). It’s not just about generating a positive ROI - it’s about generating the highest possible positive ROI. You need to place your bets where you will get the greatest return when you win. It might feel like a win to generate a return of $90. But when you can generate $420 for the same budget, the same exposure and the same level of success, you’ve left money on the table when you settle for $90.
And how do you maximize ROI? We’re back to the Data-Information-Knowledge-Wisdom (DIKW) curve that I posted a while back. You maximize your ROI potential by applying a knowledge-based marketing strategy, especially in the area of initial allocation of resources (see the AudetteMedia Internet Marketing Cube). The further you can move your strategy along the DIKW curve, the more you increase your chances of maximizing return.
And if you have to bet in Las Vegas, now you know the best way to bet on #8 (but you’re still better off playing the Pass line and taking the cost-free odds - but that’s a story for another time).
P.S. Predictably Irrational and The Drunkard’s Walk are two recent outstanding books on probability and statistics that contain insights relevant to internet marketing. You will find short reviews here.
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If you are really on a roll and feeling it, play the hard 8 - thats when the real money comes in
,Michael Martin
Google And Blog
Said Michael Martin on January 15th, 2009 at 12:06 am