![Problem Statement–
Describe the Problem Adblockers present to GYF
• The revenue for the free services by GYF, was generated originally through selling ads on digital services for desktops
but according to last year recording 70% of GYF’s total digital advertising revenue came from mobile advertising.
• Rise of the ad blocking software has caused concerns to companies like GYF which rely heavily on revenues from
advertising.
• According to report by GlobalwebIndex in 2018, 44.8% of the total surveyed users use ad blocks of which 45% of
them used ad block softwares on hand held devices (Mobiles, tablets, iPads etc.)
• An audit by Association of online Publishing, in 2018 its publisher members lost more than £18.4m, up by more than a
third from £13.7m in 2017 [1].
• The number of people using ad-blocking technology on mobile browsers has surged to 527 million, an increase of
64% over the last three years, according to a report published, that means a total of 763 million devices were running
ad blockers in the fourth quarter of 2019, the report said [2].
Figure 1: Global share of Adblock usage (Source: GlobalwebIndex Q3 2018 Base: 93,803 internet users aged 16 - 64 among which 42,078 respondents who have used ad blocker in last month)
Reference: [1] https://www.campaignlive.co.uk/article/ad-blocking-boom-over-publishers-losses-jump-18m/1584297
[2] https://www.cnet.com/news/ad-blocking-takes-off-on-mobile-phones-a-challenge-for-publishers/](https://image.slidesharecdn.com/business-analytics-capstone-project-finalsubmission-201115124054/85/Business-analytics-capstone-project-final-submission-3-320.jpg)
![Effect – Action significance rating
Describe the anticipated effects of your strategy
• All the actions are rated (0 to 3, 0: not significant; 1: low significance; 2: moderate significance; 3: high
significance) to answer how significant the strategy is for the business unit.
• Based on the total rating budget is distributed for all the strategies.
• Assuming GYF has same revenue as Yahoo! In 2015 [1], 5% of the total revenue [2] has been allotted for
strategy implementation (0.05 x $ 4960 million = 248 million)
• Each rating is divided by the total rating to obtain ‘Normalized rating’ (e.g. normalized rating for E course
initiative under Technology is 3/ 7 = 0.42
Reference:
[1] http://www.annualreports.com/HostedData/AnnualReportArchive/y/NASDAQ_YHOO_2015.pdf , Pg 37
[2] https://www.frog-dog.com/magazine/how-much-should-companies-budget-for-marketing](https://image.slidesharecdn.com/business-analytics-capstone-project-finalsubmission-201115124054/85/Business-analytics-capstone-project-final-submission-14-320.jpg)
Business analytics-capstone-project-final submission
- 1. Business Analytics Capstone Framework for Strategy Arghyadeep Bhattacharjee 21/05/2020
- 3. Problem Statement– Describe the Problem Adblockers present to GYF • The revenue for the free services by GYF, was generated originally through selling ads on digital services for desktops but according to last year recording 70% of GYF’s total digital advertising revenue came from mobile advertising. • Rise of the ad blocking software has caused concerns to companies like GYF which rely heavily on revenues from advertising. • According to report by GlobalwebIndex in 2018, 44.8% of the total surveyed users use ad blocks of which 45% of them used ad block softwares on hand held devices (Mobiles, tablets, iPads etc.) • An audit by Association of online Publishing, in 2018 its publisher members lost more than £18.4m, up by more than a third from £13.7m in 2017 [1]. • The number of people using ad-blocking technology on mobile browsers has surged to 527 million, an increase of 64% over the last three years, according to a report published, that means a total of 763 million devices were running ad blockers in the fourth quarter of 2019, the report said [2]. Figure 1: Global share of Adblock usage (Source: GlobalwebIndex Q3 2018 Base: 93,803 internet users aged 16 - 64 among which 42,078 respondents who have used ad blocker in last month) Reference: [1] https://www.campaignlive.co.uk/article/ad-blocking-boom-over-publishers-losses-jump-18m/1584297 [2] https://www.cnet.com/news/ad-blocking-takes-off-on-mobile-phones-a-challenge-for-publishers/
- 4. Problem Statement– Describe the Problem Adblockers present to GYF • Blanket ad-blocking destroys the ecosystem wherein GYF will not be able to continue providing their contents for free. • On the other hand, ad blocking technology companies aims to establish ‘new rules of engagement’ between consumers and advertisers that are useful and unobtrusive. • Apple (and other mobile browser companies ) allows ad- blocks on its browsers with an aim to provide better browsing experience to its users but maybe also with an underlying motive to move the advertisers to its apps where ad block is not possible. • For an end user, ads can slow websites down, tax your phone battery and eat through your monthly network data plan faster. On top of that, there's a growing realisation that ads can be used to track you online, a potential privacy problem. As a business analytics case GYF has to answer the following questions: 1) What is the impact of ad-block on its revenue ? 2) Do end users find the advertisement obtrusive and distracting to their user experience ? 3) Are their customers evaluating the impact of ad-block and looking for an alternative way of advertisement ? 4) Should GYF make changes in its business model to incorporate the presence of ad-blocks ? 5) Should GYF re-evaluate its technology to ensure end users do not use ad blocks ? Figure 2: Growth of Adblock users over years
- 5. Problem Statement– Application Exercise 1 – Research Methods and Tools (Optional) 1. Given your definition of the problem faced by GYF, what type(s) of research will you employ to learn more about the strategy the DATA Team should pursue? • I will carry out a combination of descriptive research and causal research. • Descriptive research to understand the end user feedback on their experience with ads on GYF services - Are they distracting, do they close a page because there is too much ad etc. • Causal research will be carried out to check which kind of ads are actually converting into purchases from the advertisers to identify useful ads and which ads bad and not converting into any purchases. 2. What research tools could you use to conduct that research? • I could use mobile & desktop surveys as provided by Qualtrics to get end user feedback on use of ad block, quality of ads, impact on user experience • I could use RFM (Recency, Frequency, Monetary value) evaluation to identify more valuable advertisers and then decide steps to keep those advertisers satisfied and make them keep coming back to GYF. • I could use A/B testing to evaluate which ads are actually being liked by end users and are actually converting into purchases • I could use A/B testing to check if choice to skip ads allow the customer to not use ad blocks (e.g. for customers that don’t use ad blocks, received from the survey, some get an option to skip ads, others do not and who stays longer on that specific page etc.)
- 6. Strategy
- 7. Strategy Describe your proposed strategy • The way to tackle the Ad-blocker’s problem posed to GYF should be a two pronged approach: 1.Company directives 2.Business unit strategies •Wherein business units are free to deploy their own strategies based on how affected they are by the ad block problem. •However, all their strategies have to fulfil the directives laid out by GYF on online advertisement. 15.8 15.5 10.5 10.5 9.1 6.9 5.3 Technology Sports Search engines Webmails Style News Business Figure 3: % Adblock users according to website categories relevant to GYF Reference: https://www.adblockanalytics.com/insights/ Company Directives 1) Adblock detection: Every business unit has to report the annual average percentage of Adblock users among its viewers. The business units are free to choose from the alternatives available in the market (E.g. Adblock detection softwares, IAB detection scripts, regular surveys etc) 2) Adherence to ‘Better Ad Standards*’: Every business unit must have a system to review the ads posted by their customers to check if they comply with the guidelines of ‘Better ad Standards*’ and eliminate/ penalise them if they violate. 3) Strategy success metrics: Every business unit has to clearly define its metrics for defining the success of their strategies implemented and these metrics must be shared with their valuable customers to consolidate their trust. Success metrics must include financial as well as customer satisfaction data. * Reference: https://www.betterads.org/standards/
- 8. Strategy Describe your proposed strategy • Considering figure 3 (on slide 7) as the reference for Adblock user’s data we can conclude that GYF has to come up with concrete strategies for Technology and sports segment of business unit GYF digital media since they have the highest percentage of Adblock users. 1. GYF Technology - Strategy • Since advertising program of GYF digital media resembles Youtube’s advertising program, it can be safely assumed that most of the ads are videos. • The e-learning market is an untapped hotspot. It’s expected to balloon to $325 billion by the year 2025.. • GYF Technology could collaborate with Massive Open Online courses websites to create free overview video courses on innovations with a link to buy the complete course on their individual sites. • These free courses could be referenced on their articles/ technical papers as well to understand certain concepts, being discussed in the article, better. • The engagement level of these video courses will be monitored on a separate scale to ensure user experience remains positive. No other advertisements would appear on GYF Technology. 2. GYF Sports & GYF Style - Strategy • GYF Sports & GYF style even though may have very small overlap of users, they could have similar strategies • Both the segments could use a combination of affiliate marketing and native advertisement. • Native advertisement though is very common in recent times, affiliate marketing typically involves a visitor clicking a special link on your website which results in a cookie being placed in the visitor’s browser for a pre- defined time period (typically 30 to 60 days). If the visitor ends up purchasing the service or product during that time period, the website owner who was promoting it gets a commission. • The reach, frequency, impact and click through rates for both form of advertisements will be monitored.
- 9. Strategy Describe your proposed strategy 3. GYF Search - Strategy • GYF search will only stick to native advertisement as its sole strategy 4. GYF News & GYF Business - Strategy • Since News and business are not very affected, 1. GYF news will only display messages showing the impact of adblock on free content with a voluntary choice of paying for the content. 2. GYF business will ask for users to register on their website using mail (or use GYF mail account directly) for free content and then use the email database to send targeted promotional mails to its users. Implementation • GYF Business Services (GBS), an independent team, will monitor and approve the strategy metrics of each business units • Budgets and technical support by GBS will be allocated based on the Adblock detection report, robustness of better ads compliance system and strategy success metrics report. • All the business units will be hand held on the company directives and realignment of their businesses according to the new strategy. • GYF Technology will require Business Development Team for its online courses initiative. • Advertisers will be trained to design the advertisements according to our business strategy and company requirements. • GBS may conduct independent pan business unit end user researches to recommend corrections in the strategies from time to time.
- 10. Strategy Application Exercise 2 – Hiring a Team Leader (Optional) • Based on the information provided in Application Exercise 2, describe here why you would hire Carrie Candidate or Peggy Prospect to be the second-in- command of the DATA Team. I choose PEGGY PROSPECT. Reasons why Peggy prospect will be a better choice • Prior work experience & deep knowledge in ad-selling field. This shows she knows the industry trends. • Personality matches with DATA team. This makes it easy to get the team aligned. • Good job knowledge. This reduces the time to get used to the new role and responsibilities. • Her focus on short term strategies can be changed in the coming days.
- 12. Effects Describe the anticipated effects of your strategy • The actions are defined for the strategy with the effect it is targeting • In the next slide every strategy is assigned with rating +1: positive / -1: negative effect it generates • These ratings are summed to generate the overall weight of the ‘immediate effects’ • These weights are then assigned to targeted effects (user experience=6 & Advertiser retention = 8) and summed up • The summed weight of targeted effects gives a sense at the inclination of the strategy • For example, as seen in the next slide, in this study the strategies are well distributed but slightly more focused on retention of advertisers.
- 13. Effects Describe the anticipated effects of your strategy Revenue User experience Compliance to better ad standards Adblock detection system Quality Advertisement Strategy success metrics E Course Initiative Native advertising Engaging Advertisement Affiliate Marketing Anti Adblock message display End user research Targeted promotions Organizational restructuring Customer retention New Business development team Agreement to advertisement Advertiser’s trust -1 +1 -1 +1 +1 +1 +1 +1 +1 +1 +1 +1 +1 +1 2 3 2 3 1 1 +2 -2+2 +1 +1 +3 +3 +3 +1 +1 -1 6 8 +1 12 Strategy Immediate effect Targeted effect
- 14. Effect – Action significance rating Describe the anticipated effects of your strategy • All the actions are rated (0 to 3, 0: not significant; 1: low significance; 2: moderate significance; 3: high significance) to answer how significant the strategy is for the business unit. • Based on the total rating budget is distributed for all the strategies. • Assuming GYF has same revenue as Yahoo! In 2015 [1], 5% of the total revenue [2] has been allotted for strategy implementation (0.05 x $ 4960 million = 248 million) • Each rating is divided by the total rating to obtain ‘Normalized rating’ (e.g. normalized rating for E course initiative under Technology is 3/ 7 = 0.42 Reference: [1] http://www.annualreports.com/HostedData/AnnualReportArchive/y/NASDAQ_YHOO_2015.pdf , Pg 37 [2] https://www.frog-dog.com/magazine/how-much-should-companies-budget-for-marketing
- 15. Effects – Normalized significance rating Describe the anticipated effects of your strategy Normalized Significance rating
- 16. Effects – Effect rating Describe the anticipated effects of your strategy • How impactful is the effect of strategy expected for the business unit • The effects of the strategy are also rated (0-3, 0: no effect; 3: highest effect) on each business unit • These ratings are based on experience and can be changed regularly to update the effect rating
- 17. Effects Describe the anticipated effects of your strategy • The ‘normalized significance ratings’ are then multiplied with ‘effect rating’ to generate weights of each strategy for a business unit. These weights have been used in Application Exercise 3 • Weights are read as: times increase in revenue per $ expenditure • For example, $1 expenditure on company directives implementation for GYF sports will result in $ 1.5 increase in its revenue, whereas for GYF style the same strategy will result in only $ 0.3 increase in its revenue. • Thus it makes sense to spend on GYF sports than GYF Style in Company directives implementation Normalized significance rating x effect rating = weight
- 18. Effects Application Exercise 3 – Designing a Deterministic Optimization Model • Provide an explanation of the calculations you performed to build an optimization model using decision variables, constraints, and an objective; this model could use the scenario in Application Exercise 3, or one of you own devising. • A deterministic optimization model has been developed to evaluate how much money should be spent on each strategy for GYF sports and GYF Style with the total budget allotted to them ($ 89.3 million) • The model shows no money should be spent on restructuring GYF sports rather it should focus on implementing company directives, whereas GYF Style should focus on training the advertisers and spend the rest of the money on restructuring to recover the entire expenditure into an increase in revenue.
- 19. Effects Application Exercise 3 – Designing a Deterministic Optimization Model • Provide an explanation of the calculations you performed to build an optimization model using decision variables, constraints, and an objective; this model could use the scenario in Application Exercise 3, or one of you own devising.
- 20. Measurement Describe the anticipated effects of your strategy and how you will measure them Effects Non financial measures Financial measures Quality Advertisement Rate of standard violation/webpage/advertiser Engaging advertisement No. of purchases YOY increase in revenue Clickthrough rates Advertiser's trust Recency & frequency of the advertisers Percentage increase in sale of adspace Agreement to advertisement Decrease in the percentage use of adblock on GYF websites New business development team Collaboration network of the team with rest of the organization/ within the team Percentage Growth of business Organisational restructuring Performance evaluation Percentage Growth of business Strategy Success Metrics
- 21. Measurement Describe the anticipated effects of your strategy and how you will measure them • Based on the measures of the effect and comparing them to previous years, each effect could be rated on a scale of -3 to +3. -3: Lowest performance in that specific effect in past 3 years -2: Lower than last year but lower performance in past three years known -1: Lower than last year but historically several lower performances known +1: Better than last year but historically even better results are known (including one in 3 years) +2: Better than last year but better performance once in last three years known +3: Best performance in three recent years. • The ratings on each effect could be traced back to its strategy and assigned the same rating as that of the effect. • Cumulative rating will be the arithmetic sum total of all the ratings from each effect and that will be the Success score of the strategy. • These scores will be indicative of the continuation, discontinuation, necessary modification or strengthening of the strategies for GBS. • The scores will also give confidence to the advertisers on the company and its business model. Strategy Success Metrics
- 22. Measurement Application Exercise 4 – Identifying Key Drivers • Apply the “causal business model” performance measurement framework to your strategy Engaging advertisement/ video lectures Advertisement acceptance Advertiser’s trust Advertiser Retention Sustained adspace sales Revenue CausalBusinessmodel Hypothesis – More engaging the advertisement more is the acceptance – Less engaging the advertisement less is the acceptance – More acceptance will lead to more adspace sale and to more revenue Key Driver : Advertisement engagement Strategy: E Courses initiative for GYF Technology Measure of engagement : 1) Watch time 2) Number of re-watch 3) Clickthrough rates 4) Total number of unique views
- 23. Measurement Application Exercise 4 – Identifying Key Drivers • Apply the “causal business model” performance measurement framework to your strategy • Firstly a comparison should be done (bar graph of regression coefficients) all the measures of engagement (i.e. average watch time, number of re-watch, click –through rates, total number of unique views ) with revenue. • This will give an idea of which of the four mentioned measure of engagement is best correlated with revenue growth. • Here we assume average watch time shows the best correlation with revenue. • Next we should plot average watch time versus number of purchases to identify the optimal watch time of the advertisement that keeps the viewers most interested and converts into a purchase. 0 1 2 3 4 5 NumberofPurchases Average Watch time (mins) To lengthy adToo short ad Disinterested viewerInattentive viewer Just right ad length to interest the viewer
- 24. Conclusion • The adblock problem faced by GYF has been defined • A series of Pan GYF strategies and individual business unit strategies have been chalked out • A detailed implementation process, significance and effects have been quantified • Based on informed quantification budget allocation has been done for each strategy • An optimization model has been designed to ensure proper use of the allotted budget to maximize revenue • The effects of the strategy has been listed. The weightage of these effects on the overall revenue has been evaluated • These approach allows us to keep checking and correct the strategies to follow the desired path • The measures of effects have been defined • GYF should emphasize all the business units to implement the Company directives with targeted strategies for GYF Technology, sports and style. • GYF should also focus to relate the advertisement viewing experience to its revenue generation to fine tune its strategy and models developed.