Basic knowledge of advertising-roi decomposition

Any online advertising system, are faced with the problem of ROI, for Invest, we do not consider, because there are many ways for traffic can be bought back, also can not be optimized (of course, when RTB is optimized). Return is the main optimization direction,return= Ctr * Value created per click. For example: click-through rate is 10%, each Click brings the benefit is 5 yuan, then the profit of each hit is 10% * 5 = 0.5 Yuan. There are two very important concepts in the calculation of advertising,1. Ctr, Ctr is a function of user (U), ad (a), Context (c), click Value is User (U) and AD (a) function, can be considered not related to context (c), Because the user has jumped to the page where the product is located. 2.ECPM, CTR and click Value of the product is ECPM (expect CPM), it is a very important value. return is the cumulative value of each ECPM.

Inverstment formula in the #x * CPX, if the CPM is the total number of impressions #x, by the cost of each display, if the CPC is the cost per click. T in the return formula represents the number of clicks.

Different decomposition corresponds to different market patterns. CPM Market : is a fixed ECPM, by the media and agents to settle, is the agent's own estimate of the value of the display, the risk is in the demand side, this way is beneficial to the media. This approach has a certain advantage over brand advertising, as brand advertising is influenced by advertising as a long-term process, and it is difficult to estimate ROI. American brand advertising is generally used in CPM settlement, while China is generally used by day package. CPC Market : It is the roi divided into Ctr and click Value, the ad system is responsible for estimating CTR, and advertisers are responsible for estimating click Value. Advertisers just need to tell the ad system what the value of a click is.

Basic knowledge of advertising-roi decomposition