Tyler Foxworthy, Chief Scientist at DemandJump, discusses the similarities of marketing and investing.
Tyler: Hi, I'm Tyler Foxworthy, Chief Scientist at DemandJump, and I lead all of our research and development efforts to develop the algorithms that power the DemandJump TrafficCloud platform.
Today, I wanted to discuss a little bit about the similarities between marketing and investing
Traditionally, when someone thinks about picking stocks, they think about trying to create a portfolio of stocks which minimize risk and maximize expected return and we can do this through the power of statistics.
We could look at the variance and the volatility associated with the stock, we could look at the expected earnings and there's a lot of historical metadata that we can pull together to come up with what we at least hope are ideally balanced portfolios that achieve our objectives.
Marketing is substantially no different that if you think about an ad placement before let's say an AdWords paid search ad.
A keyword is kind of like a stock.
It has an expected return which is the conversion rate multiplied by the expected or down order size and then it has an expected risk which is the cost per click.
It's when we look at the historical data associated with individual keywords or individual ad placements and we look at how we can bundle those together into portfolios of keywords such as an ad group or a campaign and we can use very similar types of mathematics that are used in finance to optimally combine pools of media together in order to create a portfolio of assets which hopefully has a market beating return.