A Decision Theoretic Approach to Targeted Advertising

A simple advertising strategy that can be used to help increase sales of a product is to mail out special o ers to selected potential customers. Because there is a cost associated with sending each o er, the optimal mailing strategy depends on both the bene t obtained from a purchase and how the o er a ects the buying behavior of the customers. In this paper, we describe two methods for partitioning the potential customers into groups, and show how to perform a simple cost-bene t analysis to decide which, if any, of the groups should be targeted. In particular, we considertwo decision-treelearning algorithms. The rst is an \o the shelf" algorithm used to model the probability that groups of customers will buy the product. The second is a new algorithm that is similar to the rst, except that for each group, it explicitly models the probability of purchase under the two mailing scenarios: (1) the mail is sent to members of that group and (2) the mail is not sent to members of that ...

• Type: Conference
• Year: 2000
• Where: UAI
• Authors: David Maxwell Chickering, David Heckerman
• Keywords: Optimal Mailing Strategy, Potential Customers, Simple Advertising Strategy, UAI 2000, UAI 2008