Evaluating and Optimizing Online Advertising: Forget the Click, But There are Good Proxies

Abstract Online systems promise to improve advertisement targeting via the massive and detailed data available. However, there often is too few data on exactly the outcome of interest, such as purchases, for accurate campaign evaluation and optimization (due to low conversion rates, cold start periods, lack of instrumentation of offline purchases, and long purchase cycles). This paper presents a detailed treatment of proxy modeling, which is based on the identification of a suitable alternative (proxy) target variable when data on the true objective is in short supply (or even completely nonexistent). The paper has a two-fold contribution. First, the potential of proxy modeling is demonstrated clearly, based on a massive-scale experiment across 58 real online advertising campaigns. Second, we assess the value of different specific proxies for evaluating and optimizing online display advertising, showing striking results. The results include bad news and good news. The most commonly cited and used proxy is...