Carryover and Shape Effects in Media Mix Modeling: Paper Review

The full paper can be found here: link

Table of Contents

— — —

To begin, media mix models (MMM) aim to uncover the causal effect of paid media on a metric of interest, typically sales. Historically, the problem has largely been modeled via linear regression and the causal impact has been derived using Rubin’s potential outcomes framework.

In simple (data science) terms, this translates to

Training a regression model that predicts sales using media spend and control variables.
Deriving causal impact by comparing sales when media spend is at observed amount and when it is set to zero.

Estimating casual impact from observational data has a number of issues i.e. “correlation doesn’t equal causation” for starters. And media mix models have a host of unique issues to take note of. An excellent review of these issues can be found here: Challenges And Opportunities In Media Mix Modeling

This paper focuses on two specific issues:

Carryover Effects i.e. lagged effects
Shape Effects i.e. diminishing returns

While also providing a Bayesian model, ROAS calculations and optimization methods.

Carryover Effects

Carryover effects, often called lagged effects, occur when media spend effects sales across a number of days. For example, if we spend $100 on display advertising today, we may not see the effects of this spend for several days. The adstock function attempts to parameterize this phenomenon and the paper takes two approaches to adstock modeling:

Geometric

This is a weighted average going back L days, where L can vary by media channel.
The effect has the largest impact on the day of spend and decays thereafter.

Delayed Adstock

The effect of media spend spikes T (theta) days after media spend.

Implementation

def geoDecay(alpha, L):
    '''
    weighted average with geometric decay

    weight_T = alpha ^ T-1 

    returns: weights of length L to calculate weighted averages with. 
    '''
    return alpha**(np.ones(L).cumsum()-1)

def delayed_adstock(alpha, theta, L):
        '''
    weighted average with dealyed adstock function

    weight_T = 

    returns: weights of length L to calculate weighted averages with. 
    '''
    return alpha**((np.ones(L).cumsum()-1)-theta)**2

def carryover(x, alpha, L, theta = None, func='geo'):
    '''
    1\. x is a vector of media spend going back L timeslots, so it should be len(x) == L

    2\. Weights is a vector of length L showing how much previous time periods spend has on current period. 

    3\. L is max length of Lag.

    returns transformed vector of spend

    ## update with numpy average 
    ## np.average(x[:2], weights=[1,.9])
    '''
    transformed_x = []
    if func=='geo':
        weights = geoDecay(alpha, L)

    elif func=='delayed':
        weights = delayed_adstock(alpha, theta, L)

    for t in range(x.shape[0]):
        upper_window = t+1
        lower_window = max(0,upper_window-L)
        current_window_x = x[:upper_window]
        t_in_window = len(current_window_x)
        if t < L:
            new_x = (current_window_x*np.flip(weights[:t_in_window], axis=0)).sum()
            transformed_x.append(new_x/weights[:t_in_window].sum())
        elif t >= L:
            current_window_x = x[upper_window-L:upper_window]
            ext_weights = np.flip(weights, axis=0) 
            new_x = (current_window_x*ext_weights).sum()
            transformed_x.append(new_x/ext_weights.sum())

    return np.array(transformed_x)

#causality #causal-inference #data-science #modeling #media-mix-modeling

Carryover Effects

Implementation

towardsdatascience.com

Carryover and Shape Effects in Media Mix Modeling: Paper Review