5100_AS3

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Columbia University *

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5100

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Marketing

Date

Feb 20, 2024

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Uploaded by JusticeLightningDragonfly30

1. Taskabella conducted this marketing campaign using an experimental design. What was the conversion rate? Explain whether or not you believe the advertising campaign was effective. Test number = sum(data$TEST) = 553377 Control number = nrow(data) - test_number = 28727 Test conversion rate = mean(data[data$TEST == 1, "CONVERTED"]) * 100 = 2.652% Control conversion rate=mean(data[data$TEST == 0, "CONVERTED"]) *100= 1.267% Overall conversion rate = sum(data$CONVERTED) / nrow(data) * 100 = 2.584% (2.652-1.267) / 1.267 *100 = 109.3% Group Total Users Conversion rate Control 28727 1.267% Test 553377 2.652% The test group, which was exposed to the advertising campaign, had a higher conversion rate (2.652%) compared to the control group (1.267%). This suggests that users in the test group were more likely to convert after being exposed to the campaign. It appears that the advertising campaign was effective as the conversation rate increased by 109.3%, which is a huge improvement. 2. What was the increase in revenue, assuming $40/handbag, resulting from the campaign? Price per handbag = 40 Increase in Revenue=(Test Conversion Rate−Control Conversion Rate)×Number of Users in Test Group × Revenue per Handbag =(2.652%−1.267%)×553,377×40 = 306,570.868 ≈ $306,570.86 Increase in revenue resulting from the Campaign: $306646.26 3. What was the ROI of the campaign based on revenue? Total cost= Total Impressions/1000*average CPM = 13128359 / 1000 * 9=118155.23 ROI = Net Gain/Total Cost*100=(306,570.86-118155.23)/ 118155.23*100=159.46% 4. What age group(s) represent Taskabella’s major customer demographic? Explain the rationale for your answer (50% of sales)? Age Group Converted No. Conversion Rate Revenue(%) 1 4688 2.40% 0.3117 2 5233 2.70% 0.3478 3 5121 2.65% 0.3404 Based on the results, none of the age groups individually achieve a 50% conversion rate. According to the demographic, Age Groups 2 and 3 together, which includes people over 25, contribute to almost 69% of the conversions, surpassing the 50% threshold. Therefore, these two age groups collectively represent the major customer demographic that contributes significantly to the sales. 5. What income group(s) represent Taskabella’s major customer demographic (50% of sales)?

Here are the results: Income Group Converted No. Conversion R Revenue(%) 1_LT_25K 584 1.45% 3.88% 2_25K+_50K 2016 2.22% 13.40% 3_50K+_100K 4050 2.22% 26.92% 4_100K+_150K 3841 2.72% 25.54% 5_150K+_200K 2501 3.16% 16.63% 6_200K+_250K 1589 3.67% 10.56% 7_GT_250K 461 9.28% 3.06% Based on the results, still none of the age groups individually achieve a 50% conversion rate. According to the demographic, though Income Group 7 has the highest conversion rate, it contributes to lowest sales revenue. However, Income Groups 3 and 4 together, which includes people with income between 50K to 150K, contribute to 52.46% of the conversions, surpassing the 50% threshold. Therefore, these two age groups collectively represent the major customer demographic that contributes significantly to the sales. 6. What is the minimum threshold-level of impressions (the nearest 15) required for the campaign to be effective? Develop a graphic to illustrate your answer. The minimum t hreshold-level of impressions is 30 as we can see that at the point of 30 there’s a significant increase. And this is the point that is larger than the conversion rate, the re line. 7. At what level of impressions (rounded to the nearest 15) does the conversion in the treatment group plateau? Develop a graphic to illustrate your answer.

From the graph we can see that the conversion in the treatment group plateau approximately appears at 105, after which the value does not seen a significant increase. 8. The marketing campaign manager wants to operationalize your insights, and asks for a range of impressions to purchase. What is your recommendation? Explain the rationale for your recommendation. I suggest acquiring impressions up to 105 because the conversion rate experiences a significant increase within this range, as indicated by the graph in Q6. Beyond this point, the conversion rate tends to increase more gradually or may even decrease, resulting in a decline in efficiency. Identifying the most cost-effective range for impression acquisition can assist the company in avoiding unnecessary expenses and optimizing return on investment. 9. Based on your presentation of the results of your analysis to the leadership team of Taskabella, the president of Region 3 believes she should focus all of her marketing budget on the demographic segment that you identified in Question 4. Do you agree with her decision? Explain the rationale for your answer. Personally, I disagree with the decision. Primarily, examining Region 3 reveals that each age group contributes significantly to the overall sales. While age groups 2 and 3 maintain their positions as the top contributors, accounting for the highest proportions of total sales as observed in Q4, channeling the entire budget into a specific age group poses a considerable risk. Age group 1 still commands a substantial 29.75% share of total sales, which cannot be overlooked. In the event of shifts in the purchasing power of this demographic, the company might incur revenue losses. Moreover, taking a long-

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term viewpoint is crucial. Today's customers in age group 1 could potentially transition into age groups 2 or 3 in the future. Preserving the loyalty of customers across all age groups is imperative for sustained success.

5100_AS3

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