Uplift vs. Response: The Targeting Dilemma
Targeting is always reinventing itself. Who should be targeted for ads display? What should be the target customers for a direct mailing campaign or an email blast? This has been quite puzzling to Marketers in recent years. Software providers and Marketing Agencies have been quick to seize this opportunity to offer a solution to it: Uplift Modeling. Let's deep dive into what this new realm exactly means. 1- What is Uplift: Let's look at 2 groups of customers to get familiar with the concept. A pure response model would dictate to target the segment with the highest Response Rate. Now, is it the right approach? One may argue that maximum effectiveness, or Uplift , is a better criterion since 5-2 = 3 more customers would convert every 100 customers. So, Uplift is really the art of maximum efficiency by subtracting out the "base response". A corollary to this is to take out customers that are inelastic, either they cannot be convinced to take the offer (the