1

Example #2

Internet Marketing

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

FROM THE BIG BANG TO THE NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATAPatrick DeglonDirector of Engineering, Analytics Area Tech Lead

pdeglon@motorola.com

linkd.in/pdeglon

Case study: Online Search

Natural/OrganicSearch (free)

Paid Search

3FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

X days

2 purchases

missing

X days

Y days

all purchasesare incremental1 purchase is

uncorrelated

Y days

Jan 1st Feb 1st

$ $ $ $ $ $ $

click

$ $ $

Behavioral purchasesUncorrelated to Marketing

clickMar 1st

$

Influence purchaseCorrelated to Marketing

Customer behaviors and Internet Marketing Investment

Which customer purchases are influenced by Marketing?

4FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Remember this physics problem?

5

?

A

B

CD

1. AB + CD?2. AC + BD?3. AD + BC?

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

Solution: Big Data infrastructure enables large scale computational such as combine all possibilities (cross-product)

6

Statistical Noise

Signal(particle resonance)

Source: http://www.atlas.ch/news/2011/ATLAS-discovers-its-first-new-particle.html

Schematic View

Combine correlated events and uncorrelated events produce a system with a statistical noise (which is simple enough to extract) and the researched signal

CERN Example(discovery of a new particle bb)

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

Marketing incrementality

(correlated purchases) Level of

behavioral purchases

Positive LatencyPurchase after Click (potential causality)

Behavior & Internet Marketing impact

Level of behavioral purchases

0 2 4 6 8 10 12 14

Latency (days)

Number of events (pairs click-purchase)

Negative LatencyPurchase before Click (no causality)

Behavior only

-14 -12 -10 -8 -6 -4 -2

User clicks on an ad-banner at time=0

User makes a purchase X days later

Latency time for each pair click - purchase

7FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

8

Sales ROI Channel A 8% +20%Channel B 5% -10%Channel C 1% +10%

Method 1• Reduce spend on channel B• Invest in channel A• When prioritizing, ignore

channel C

Sales ROI Channel A 7% -20%Channel B 6% +30%Channel C 12% +60%

Method 2• Reduce spend on channel A• Invest heavily on channel C• Marketing counts actually for

25% of the site

<>

… So what?

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis

Case study: Online Search

9FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Case study: Online Search

Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis 10

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis

Case study: Online Search

11FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis

Case study: Online Search

12FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

13

So, what’s next?Marketing 101

Don’t Do Marketing

Do Marketing

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

14

So, what’s next?Marketing 101

Don’t Do Marketing

Do Marketing

No Purchase

Purchase

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

15

So, what’s next?Marketing 101

Don’t Do Marketing

Do Marketing

No Purchase

PurchaseL L

D D

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

16

So, what’s next?Marketing 101

Don’t Do Marketing

Do Marketing

No Purchase

PurchaseL L

D DC

C?

?

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

17

So, what’s next?Marketing 101

Don’t Do Marketing

Do Marketing

No Purchase

PurchaseL L

D DC

C?

?

Cost

Direct Return

Incr Return

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

18

So, what’s next?Marketing 101

Don’t Do Marketing

Do Marketing

No Purchase

PurchaseL L

D DC

C?

?

Cost

Direct Return

Incr Return

Rule #1: Never, ever, spend money unless you really-really have to

FROM THE BIG BANG TO NEW ECONOMY, A JOURNEY IN MAKING SENSE OF BIG DATA

So, what’s next?

Investment (costs)

Output

19FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

So, what’s next?

Investment (costs)

Output

Return (Revenues)

20FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

So, what’s next?

Investment (costs)

Output Cost

Return (Revenues)

21FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

So, what’s next?

Investment (costs)

Output Cost

Return (Revenues)

Profit

22FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

So, what’s next?

Investment (costs)

Output Cost

Return (Revenues)

ProfitMax SalesNo Profit

Total ROI = 0

Max Profit

23FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

So, what’s next?

Investment (costs)

Output Cost

Return (Revenues)

ProfitMax SalesNo Profit

Total ROI = 0

Max Profit

ΔReturn = ΔInvestmenti.e. marginal ROI = 0

24FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

So, what’s next?

Investment (costs)

Output Cost

Return (Revenues)

ProfitMax SalesNo Profit

Total ROI = 0

Max Profit

ΔReturn = ΔInvestmenti.e. marginal ROI = 0Rule #2: If you have to spend, you spend

to the point of marginal return=0

25FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Marginal Return Chart

CumulativeCost

ROI

26FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

SpendBucket i

SpendBucket 0

(most profitable)

SpendBucket N

(leastprofitable)

…

…

Marginal Return Chart

CumulativeCost

ROI

27FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

SpendBucket i

SpendBucket 0

(most profitable) …

…

Marginal Return Chart

CumulativeCost

ROIIn depth Analysis require to validate

high ROI

28FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Marginal Return Chart

CumulativeCost

ROI

CurrentSpend Level

29FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Marginal Return Chart

CumulativeCost

ROI

CurrentSpend Level

Point of marginal

return = 0(maximum profit)

30FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Marginal Return Chart

CumulativeCost

ROI

CurrentSpend Level

Area/initiatives/segment withnegative profitability

Cost reduction opportunity!

Point of marginal

return = 0(maximum profit)

31FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA

Marginal Return Chart

CumulativeCost

ROI

CurrentSpend Level

Area/initiatives/segment withnegative profitability

Cost reduction opportunity!

Point of marginal

return = 0(maximum profit)

In depth Analysis require to validate

high ROI

32FROM THE BIG BANG TO NEW ECONOMY,

A JOURNEY IN MAKING SENSE OF BIG DATA