From the big bang to the new economy, a journey in making sense of big data (part 3: Internet Marketing)

1. Example #2
1
Internet Marketing
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

2. FROM THE BIG BANG TO
THE NEW ECONOMY,
A JOURNEY IN MAKING
SENSE OF BIG DATA
Patrick Deglon
Director of Engineering, Analytics Area Tech Lead
pdeglon@motorola.com
linkd.in/pdeglon

3. Case study:
Online Search
Paid Search
Natural/Organic
Search (free)
3
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

4. Customer behaviors and Internet Marketing Investment

X days
2 purchases
missing
X days

$ $ $ $ $ $ $ $
$ $
Y days
all purchases
are incremental
Y days
1 purchase is 
uncorrelated

Jan 1st Feb 1st
click
Behavioral purchases
Uncorrelated to Marketing
click
Mar 1st
$
Influence purchase
Correlated to Marketing
Which customer purchases are
influenced by Marketing?
4
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

5. Remember this physics problem?
5
?
A
B
D C
1. AB + CD?
2. AC + BD?
3. AD + BC?
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

6. Solution: Big Data infrastructure enables large scale
computational such as combine all possibilities (cross-product)
6
Schematic View
Statistical Noise
Signal
(particle resonance)
Combine correlated events and uncorrelated events produce a system with a
statistical noise (which is simple enough to extract) and the researched signal
Source: http://www.atlas.ch/news/2011/ATLAS-discovers-its-first-new-particle.html
CERN Example
(discovery of a new particle bb)
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

7. Latency time for each pair click - purchase
Marketing
incrementality
(correlated
purchases) Level of
behavioral
purchases
Positive Latency
Purchase 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 Latency
Purchase 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
7
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

8. Method 1
Sales ROI
Channel A 8% +20%
Channel B 5% -10%
Channel C 1% +10%
• Reduce spend on channel B
• Invest in channel A
• When prioritizing, ignore
channel C
Method 2
Sales ROI
Channel A 7% -20%
Channel B 6% +30%
Channel C 12% +60%
<>
• Reduce spend on channel A
• Invest heavily on channel C
• Marketing counts actually for
25% of the site
… So what?
8
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

9. Case study:
Online Search
Consumer Heterogeneity and Paid Search Effectiveness:
A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis
9
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

10. Case study:
Online Search
FROM THE BIG BANG TO NEW ECONOMY,
Consumer Heterogeneity and Paid Search Effectiveness:
A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis 10
A JOURNEY IN MAKING SENSE OF BIG DATA

11. Case study:
Online Search
Consumer Heterogeneity and Paid Search Effectiveness:
A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis
11
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

12. Case study:
Online Search
Consumer Heterogeneity and Paid Search Effectiveness:
A Large Scale Field Experiment, Thomas Blake, Chris Nosko, Steven Tadelis
12
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

13. So, what’s next?
Marketing 101
13
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
14
Don’t
Do Marketing
Do Marketing
Purchase
No Purchase
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

15. So, what’s next?
Marketing 101
15
Don’t
Do Marketing
Do Marketing
Purchase
No Purchase
L 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
16
Don’t
Do Marketing
Do Marketing
Purchase
No Purchase
L L
D D
C
C
?
?
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

17. So, what’s next?
Marketing 101
17
Don’t
Do Marketing
Do Marketing
Purchase
No Purchase
L L
D D
C
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
18
Don’t
Do Marketing
Do Marketing
Purchase
No Purchase
L L
D D
C
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

19. So, what’s next?
Investment (costs)
Output
19
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

20. So, what’s next?
Investment (costs)
Output
Return (Revenues)
20
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

21. So, what’s next?
Output Cost
Return (Revenues)
Investment (costs)
21
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

22. So, what’s next?
Output Cost
Return (Revenues)
Investment (costs)
Profit
22
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

23. So, what’s next?
Output Cost
Return (Revenues)
Investment (costs)
Max Sales Profit
No Profit
Total ROI = 0
Max Profit
23
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

24. So, what’s next?
Output Cost
Return (Revenues)
Investment (costs)
Max Sales Profit
No Profit
Total ROI = 0
ΔReturn = ΔInvestment
i.e. marginal ROI = 0
Max Profit
24
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

25. So, what’s next?
Output Cost
Return (Revenues)
ΔReturn = ΔInvestment
Ri.ue. lmea rg#in2al R: OIIf = y0 ou have to spend, you spend
to the point of marginal return=0
Investment (costs)
Max Sales Profit
No Profit
Total ROI = 0
Max Profit
25
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

26. Marginal Return Chart
Cumulative
Cost
ROI
26
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

27. Spend
Bucket i
Spend
Bucket 0
(most
profitable)
Spend
Bucket N
(least
profitable)
…
…
Marginal Return Chart
Cumulative
Cost
ROI
27
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

28. Spend
Bucket i
Spend
Bucket 0
(most
profitable) …
…
Marginal Return Chart
Cumulative
Cost
ROI
In depth Analysis
require to validate
high ROI
28
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

29. Marginal Return Chart
Cumulative
Cost
ROI
Current
Spend
Level
29
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

30. Marginal Return Chart
Cumulative
Cost
ROI
Current
Spend
Level
Point of
marginal
return = 0
(maximum profit)
30
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

31. Marginal Return Chart
Cumulative
Cost
ROI
Area/initiatives/segment with
negative profitability
Cost reduction opportunity!
Current
Spend
Level
Point of
marginal
return = 0
(maximum profit)
31
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA

32. Marginal Return Chart
Cumulative
Cost
ROI
Area/initiatives/segment with
negative profitability
Cost reduction opportunity!
Current
Spend
Level
Point of
marginal
return = 0
(maximum profit)
In depth Analysis
require to validate
high ROI
32
FROM THE BIG BANG TO NEW ECONOMY,
A JOURNEY IN MAKING SENSE OF BIG DATA