Mathematical marketing: a piece of calculus to change the way you advertise
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Re: Mathematical marketing: a piece of calculus to change the way you advertise
#2How more convoluted can this explanation be?
The question is equivalent to just "Find the maximum of nb_conversion × (cost_per_conversion - margin_per_conversion)", and the only interesting question is the relationship between the cost per conversion and the number of conversions, which is not a matter of math but of practical statistics.
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#3Fun reading for a university class, but the real world doesn’t work this way. Optimizing for a target cpa is never a possibility because at an agency or in house marketing team your given x budget and expected to spend it.
I’ve never seen someone underspend a budget and be thanked for it.
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#4Fun reading for a university class, but the real world doesn’t work this way. Optimizing for a target cpa is never a possibility because at an agency or in house marketing team your given x budget and expected to spend it. I’ve never seen someone underspend a budget and be thanked for it.
Indeed. I would like to see further reading on the methodology of adjusting your spend to maintain adequate levels of conversion while hitting your budget.
Of course, many agencies can quite quickly find places to spend money beyond AdSense :)
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#5Really, you're going to use a logarithm because it fits one data point better?
Besides you might as well just use all your datapoints directly. There's no real need to interpolate between them (and if you really want to optimize your ad costs that finely, don't use a function that predicts -infinty gross profit if you don't use ads).
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#6Fun reading for a university class, but the real world doesn’t work this way. Optimizing for a target cpa is never a possibility because at an agency or in house marketing team your given x budget and expected to spend it. I’ve never seen someone underspend a budget and be thanked for it.
This is a good point, and you're right that some brands work this way.
I've worked agency and in-house, and most of time I've worked without budgets, just trying to maximise volume at a particular CPA. More brands are moving this way, but a few do still just stick to fixed budgets.
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#7So marginal revenue = marginal costs, aka Econ 101 lecture 1?
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#8Fun reading for a university class, but the real world doesn’t work this way. Optimizing for a target cpa is never a possibility because at an agency or in house marketing team your given x budget and expected to spend it. I’ve never seen someone underspend a budget and be thanked for it.
Indeed. I would like to see further reading on the methodology of adjusting your spend to maintain adequate levels of conversion while hitting your budget. Of course, many agencies can quite quickly find places to spend money beyond AdSense :)
Exactly, this appears effective projecting the fixed budget for one specific tactic, on a product with geo or demo targeting limitations.
The blog post failed to mention that when scaled up there is much more in play than strictly consumer acquisition (e.g. brand awareness) that is just as important when marketing in most B2C verticals.
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#9Hi folks, I'm the author of the post — I wrote it because I think a lot of brands tend to pluck numbers out of thin air when they're talking about marketing targets, without knowing how they're affecting their bottom line.
This might seem like econ 101 as zwaps mentioned, but there are a lot of brands who don't take anything like this approach still.
Keen to hear people's thoughts :)
Re: Mathematical marketing: a piece of calculus to change the way you advertise
#10Earlier quoted context omitted.
Indeed. I would like to see further reading on the methodology of adjusting your spend to maintain adequate levels of conversion while hitting your budget. Of course, many agencies can quite quickly find places to spend money beyond AdSense :)
Exactly, this appears effective projecting the fixed budget for one specific tactic, on a product with geo or demo targeting limitations. The blog post failed to mention that when scaled up there is much more in play than strictly consumer acquisition (e.g. brand awareness) that is just as important when marketing in most B2C verticals.
You're right that there's more than just last-click cost per conversion, but that doesn't mean this approach is incompatible with these extra complexities.
You might run conversion lift tests as a way to calculate the impact of increased brand awareness, and you could plug the data from these into the method outlined in the post. There you'd be looking for the optimal cost per incremental conversion rather than just optimal cost per conversion.
This is just one idea, hopefully shows that the post's method doesn't have to just use last-click conversion data.