A Decision Theoretic Approach to Targeted Advertising

01/16/2013
by   David Maxwell Chickering, et al.
0

A simple advertising strategy that can be used to help increase sales of a product is to mail out special offers to selected potential customers. Because there is a cost associated with sending each offer, the optimal mailing strategy depends on both the benefit obtained from a purchase and how the offer affects the buying behavior of the customers. In this paper, we describe two methods for partitioning the potential customers into groups, and show how to perform a simple cost-benefit analysis to decide which, if any, of the groups should be targeted. In particular, we consider two decision-tree learning algorithms. The first is an "off the shelf" algorithm used to model the probability that groups of customers will buy the product. The second is a new algorithm that is similar to the first, except that for each group, it explicitly models the probability of purchase under the two mailing scenarios: (1) the mail is sent to members of that group and (2) the mail is not sent to members of that group. Using data from a real-world advertising experiment, we compare the algorithms to each other and to a naive mail-to-all strategy.

READ FULL TEXT

page 1

page 2

page 3

page 4

research
10/31/2022

Advertising strategy for profit-maximization: a novel practice on Tmall's online ads manager platforms

Ads manager platform gains popularity among numerous e-commercial vendor...
research
11/19/2019

Principal Stratification for Advertising Experiments

Advertising experiments often suffer from noisy responses making precise...
research
10/31/2021

Optimal Targeted Advertising Strategy For Secure Wireless Edge Metaverse

Recently, Metaverse has attracted increasing attention from both industr...
research
11/02/2022

Statistical Modelling for Improving Efficiency of Online Advertising

Real-time bidding has transformed the digital advertising landscape, all...
research
06/14/2019

Non-zero-sum Stackelberg Budget Allocation Game for Computational Advertising

Computational advertising has been studied to design efficient marketing...
research
10/18/2020

Online-to-Offline Advertisements as Field Experiments

Online advertisements have become one of today's most widely used tools ...
research
07/04/2019

Online Evaluation of Audiences for Targeted Advertising via Bandit Experiments

Firms implementing digital advertising campaigns face a complex problem ...

Please sign up or login with your details

Forgot password? Click here to reset