musings and solutions to interesting problems: Ones that I think are easy, but then have a lot of structure.
Sunday, June 7, 2015
Video CPM as a Function of Demand - Complete
Video CPM as a function of Demand
Experiment description and Analysis
13 biggest client tactics representing about 9% of total video revenue were duplicated with all prior restrictions (geo, site, device etc.), additionally restricted to Tier I-III inventory and budget-density tested at 1X, 2X, 6X and 12X daily budget on 25, 12, 4 and 2 buckets respectively.
For each of these budget points we have the spend, cost and impressions in the TierI-III inventory.
From other sources (Roni's presentation) we know that about 15% of all our impressions (50% of all avails and 20% of cost) are in Tier I-III,
so for all the video tactics which weren't restricted to TierI-III as part of this test, we uniformly apportioned 20% of spend and cost (assuming margin was same) and 15% impressions in the tested user buckets to TierI-III inventory.
The above spend cost and impressions were added to those for the tested tactics,
and CPM vs daily cost was plotted and fitted to a power law.
Why a power law? Because cost (CPM) elasticity of demand (total cost) is the ratio of the logarithmic derivatives, which is just the exponent in a power law.