Gubela, Robin Bequé, Artem Gebert, Fabian Lessmann, Stefan
Year of Publication:
IRTG 1792 Discussion Paper No. 2018-062
Humboldt-Universität zu Berlin, International Research Training Group 1792 "High Dimensional Nonstationary Time Series", Berlin
Uplift modeling combines machine learning and experimental strategies to estimate the differential effect of a treatment on individuals' behavior. The paper considers uplift models in the scope of marketing campaign targeting. Literature on uplift modeling strategies is fragmented across academic disciplines and lacks an overarching empirical comparison. Using data from online retailers, we fill this gap and contribute to literature through consolidating prior work on uplift modeling and systematically comparing the predictive performance and utility of available uplift modeling strategies. Our empirical study includes three experiments in which we examine the interaction between an uplift modeling strategy and the underlying machine learning algorithm to implement the strategy, quantify model performance in terms of business value and demonstrate the advantages of uplift models over response models, which are widely used in marketing. The results facilitate making specific recommendations how to deploy uplift models in e-commerce applications.