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Linear Programming on Digital Advertising
- 1. A.Can Bengisu June 2016 a.can.bengisu@gmail.com BudgetAllocation for Online Advertisement Spending with Linear Programming Advisor: Engin Aktaş Ph. D.
- 2. Content ● Introduction ● Historyof Internet ● Evolution of Advertising ● Digital Advertising - Development - Economic Effectiveness - Ad Types ● Methodology ● Results & Discussion ● Conclusion
- 3. Indroduction • 3,4 BillionInternet User • Development of Digital Marketing Industry • Companies substantial investment on Digital • More Than 200 Google Partner Digital Agency in Turkey
- 4. Problems • Competition betweenAgencies • Limited Budgets of Companies • Variety in Company Goals and Restrictions
- 5. Internet Users per100 Inhabitants Early History of the Internet
- 6. Internet Users byCountry (2016)
- 7. Digital Advertising Online AdvertisingExamples ● Target Methods ● Measurable ● Cheap (Pay per click) ● Easy to generate and control ● Brand Awareness ● Website Traffic ● Promote Social Media Accounts (Like, Follower) Minority Report Advertising Scene
- 8. Development of DigitalAdvertising Timeline of Digital Advertising First Banner Ad: AT&T
- 9. Economic Effectiveness Share ofGlobal Ad Spend Advertising Revenue of Google * Turkey’s export revenue was 143 Billion $ in 2015
- 10. 1) E-Mail Marketing Typesof Digital Advertising
- 11. 2) Search EngineMarketing (SEM): The type of method which advertisers buy traffic through paid search listings. Types of Digital Advertising
- 12. 3) Display Ads:Traditional way to show banners on websites Types of Digital Advertising Targeting Methods ● Gender ● Age ● Interest ● Location ● Website’s Category ● Website’s Relevant Context ● Past Visitors (ReMarketing)
- 13. ReMarketing: Is away of method to reconnect past visitors. Types of Digital Advertising
- 14. YouTube Ads: VideoAds or Banners viewed on Youtube Types of Digital Advertising Gmail Ads: Type of display ad shown on Gmail
- 15. 4) Social MediaAds Types of Digital Advertising Facebook Ads Twitter Ads LinkedIn Ads
- 16. 5) Mobile Ads:Form of advertising via mobile devices. Types of Digital Advertising Mobile Web browsing vs. Desktop Mobile Advertising Examples
- 17. Methodology Case Company: ColdwellBanker Company Goal: To expand franchise network, increase revenue and brand awareness in Turkey Problem: Limited Budget Method: Linear programming method with the help of Excel Solver for allocate limited budget.
- 18. Linear Programming: Methodto achieve best outcome in a mathematical model with linear equations and objective function. ● Invented by George Dantzig in 1947 for planning problems in US Air Force. ● Applied to various fields such as business, industry, engineering, economics etc. Methodology
- 19. Advertisement Practices 1 2 3 4 1- SearchAds 2-Display Ads 3-Gmail Ads 4-Youtube Ads
- 20. Cost = Numberof Clicks x CPC (cost per click) Conversions = Phone Calls + Filled franchise form Conversion / Cost = It is calculated by dividing total conversion to cost values for each campaign. Advertisement Practices Ad Performance Data Analysis
- 21. How to CalculateROI’s * for Each Campaign? How to Calculate Revenue? Sales Ratio of Application Forms = %0,2 Franchise Cost = 103.000 TL Advertisement Practices *ROI: Return Of Investment
- 22. 24,58 X1 +18,2 X2 + 3,95 X3 + 4,84 X4 = Z (Objective Function) Advertisement Practices
- 23. Constraints * 1) TotalBudget for all Digital Ads should not exceed 15.000 TL 2) Minimum 3000 TL should be spent on Display Ads 3) Minimum 400 TL should be spent on YouTube 4) Display Ads and YouTube Ads must exceed %60 of total budget 5) YouTube Ads should not cost more than Gmail Ads 6) Gmail Ads should not cost more than %10 of total budget 7) Minimum 1500 Franchise Application Form *provided by Coldwell Banker’s budget planning department Advertisement Practices Variables: X1,X2,X3,X4 X1 = Search Ads X2 = Display Ads X3 = YouTube Ads X4 = Gmail Ads
- 24. Advertisement Practices Coldwell Bankerneeds to increase their revenue. Therefore their objective function should be maximized regarding their objective criterions. Excel Table Excel Solver Add-in
- 25. Results Table 10: FinalResults Table 11: Final Results of Variable Cells
- 26. Discussion Sensivity Analysis Table *Shadowprice represents the contribution to the objective per unit.
- 27. Conclusion • With thehelp of linear programming method their budget has been allocated and limited budget problem has been solved. • Sensivity Analysis report will help advertiser and company to decide about their further marketing strategies. • This method will be useful for all digital account managers regarding their ad strategies and annual budget planning.
Editor's Notes
- #2 Allocation: to divide surfing
- #4 With the rise of the industry, a lot of digital agencies have been established in last 5 years.
- #5 With the rise of the digital advertising industry these problems have been occured
- #7 Turkey placed 14th in the world with 46 million internet users. %60 penetration number put us above the average of the world
- #8 Internet advertising is a form of marketing which uses the Internet to deliver messages to consumers. *Advantages
- #9 Timeline of digital advertising
- #10 With development of the Internet, online advertising has shown a similar increase, because marketers’ online advertising budgets are growing as the years go by. As it can be seen from Figure Google made 68 Billion US dollar Ad revenue in 2015. As a comperısın to explain more clearly, Turkey’s export revenue was 143 Billion $ in 2015.
- #11 E-mail marketing is a way of directly promoting a commercial message to a group of people using email. Email marketing generates new leads for businesses, helps with winning back old customers and builds a strong communication.
- #12 Purchased ads appear on the result pages of search engines such as Google & Yandex.
- #13 The main purpose of display advertising is to deliver brand awareness and brand messages to site visitors.
- #14 When people leave website without buying anything remarketing helps advertiser to reconnect with them by showing relevant ads as they browse the web, as they use mobile apps, or as they search on Google.
- #17 last year mobile usage has passed desktop usage
- #18 * As a case company I’ve chosen on of my clients Coldwell banker. Real estate company In order to expand their branch number in Turkey, they are aiming to get quite a lot of applications
- #19 Linear programming is a method to achieve best outcome in a mathematical model with linear equations and objective function. It has been invented by George Dantzig in 1947 to use for planning problems in US Air Force.
- #21 Outcome of advertisements. It refers to the number of conversions the campaign gathers per 1 Turkish Lira, where the higher the amount of it, the better the results are. These are main values which are provided by Google AdWords report. With these values another metrics could be found such as Revenues for each campaign and Return of Investment (ROI) ratios.
- #22 The ROI is calculated by using the benefits and costs. The net benefits are the revenue minus the costs. In this study revenue is calculated by multiplying the franchise cost with sales ratios. To find out revenue, sales information has been gathered from case company
- #23 This formula is used to calculate the revenue values regarding their ROI ratios. With the highest ROI number, Search Engine Ad seems the most efficient one. However, the company has some restrictions.
- #24 With these constraints the things are getting complicated. With the help of linear programming we’ll find a optimal solution.
- #25 In order to apply linear programming, all constraints should be written on Excel
- #26 Advertisers may allocate budgets for each campaign by using Excel’s Solver add-in.
- #27 1- It is obvious that search engine ad (X1) has the largest revenue values . However because of constraint 4 2-Because of constraint 5, YouTube and Gmail limits each other. «shadow price» Since it is a negative value (-19,7) the company should be warned not to insist on this constraint 3-The other binding constraints 4 & 5 also have negative dual price which is not good for objective result. The company needs revision also for these constraints.