Advertisers are very interested in understanding whether or not their advertising dollars are effective. Attribution models are a variety of methods that assign how much of an advertising campaign's effectiveness is attributable to each advertising channel within the overall campaign. Attribution modeling is a very active and still unsolved area of marketing research. However, many marketers are already applying these models in the real world to assess advertising performance and enhance future advertising performance.

In this scenario, you're the marketing manager for a online clothing retailer. You're considering implementing a year long advertising campaign. This campaign would use three channels

digital banner ads, direct mail, and a digital radio campaign. The budget, including both startup costs (developing the creative) as well as campaign maintenance costs (ad impressions, printing and sending mailers to homes, etc.) have already been calculated.

In addition, your company has run similar campaigns in the past, and it has worked with a marketing agency that specializes in marketing analytics. Based on extensive research, this company has calculated the estimated incremental revenue expected from this campaign. Even more, this company has developed an attribution model that allocates each quarters' incremental revenues across the three advertising channels.

Calculate the Net Present Value of the entire campaign, assuming a discount rate of 25%.

1.The NPV is $

2.According to these estimates, should we conduct this advertising campaign? yes or no

3.Based on these estimates, which advertising channel should receive more money invested into it?

A. Digital banner ad

B. Direct mail

C.Direct radio

\begin{tabular}{lcc} \hline \multicolumn{1}{c}{ Estimated Costs } & StartupCosts(Year=0) & End of Year 1 \\ \hline Digital Banner Ad & $6 & $119 \\ Direct Mail & $20 & $151 \\ Digital Radio & $28 & $11 \\ \hline Total Estimated & $0.00 & $510 \\ Incremental Revenues & & \\ \hline \end{tabular} \begin{tabular}{lc} \hline & AttributedIncrementalRevenues \\ \hline Digital Banner Ad & 30% \\ Direct Mail & 20% \\ Digital Radio & 50% \\ \hline \end{tabular}