This is an abbreviated case study.
The gaming division of 21st Century Fox, now owned by The Walt Disney Company, was using Google’s Universal Ad Campaign (UAC) tool to advertise its apps. They controlled two levers—the campaign’s budget and bid price—which, over the course of the campaign, generated Return on Ad Spend (ROAS), “revenue brought in by ad viewers who install the app” divided by “amount of money spent on campaign.” The company wanted to know what budget and bid price to set in order to maximize the ROAS.
21st Century Fox came to Stratus Data with an optimization problem: how could they find the best values for budget and bid price to maximize revenue
The values chosen for budget and bid price influence ROAS in many ways. If a campaign is performing well, arbitrarily increasing budget will eventually see diminishing returns; the campaign starts attracting lower-quality customers, say, and revenue decreases. Or, say the company sets a high budget to begin with. There’s a possibility that the campaign will still get outbidded in online ad auctions, so that none of the company’s ads ever show. In this scenario, the company can increase its bid price—but that means each ad is more expensive, so that if the corresponding revenue does not increase too, ROAS will decrease.
Over five weeks, Stratus Data developed a unique optimization model that provided 21st Century Fox with recommendations for the best budget and bid price values.
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