Correlation vs. Causation in Programmatic Advertising

Programmatic advertising goes well beyond creating campaigns and tracking clicks. Despite rapid technological evolution, the fundamentals of measuring performance, optimizing campaigns, and driving ROI persist. While correlation and causation are related concepts, understanding how they differ is crucial because correlation does not always imply causation. Distinguishing the two provides more precise insights, helping to identify the underlying drivers and primary factors.

Correlation Insights

In the world of programmatic advertising, correlation refers to a statistical relationship between two variables, such as ad activities and consumer behaviors. When one variable changes, the other often exhibits a related trend. However, this relationship does not necessarily indicate that one directly influences the other.

For example, let’s say a company is advertising its flagship product, a plant-based egg alternative. On this campaign, we observe high conversion rates from profiles with environmentally-conscious attributes after seeing an ad. This suggests there is a strong correlation between climate-friendly attitudes and vegan product consumption.

While this observation is intuitively sound, if the same strength of correlation exists in a control condition in an A/B test setting, there is no causal relationship between seeing an ad and purchasing. In such cases, the incremental benefit of advertising to environmentally-conscious profiles is minimal.

The Power of Causation

Causation occurs when one variable directly influences another, establishing a clear cause-and-effect relationship. Unlike correlation, causation requires rigorous analysis, typically achieved through controlled experiments. A/B testing is often used to isolate the impact of a single variable and provide reliable data when identifying causation.

For example, the same campaign also highlights that users whose past purchases include fitness gear yield strong conversion rates. Moreover, this correlation does not exist for users in the control group, indicating that there is incremental benefit when this audience sees an ad.

As a result, more users who previously purchased fitness gear should be targeted, thereby driving incremental purchases of the plant-based egg alternative.

Causal’s Case

At Causal, our name reflects who we are: the cause that drives the effect. In programmatic advertising, it is essential to focus on strategies that deliver impact beyond clicks, ultimately driving increased sales. By focusing on causality through precise targeting, data-driven insights, and expert industry leaders, we ensure that each campaign yields measurable results. Let us be the cause that maximizes your brand’s ROI while fostering consumer trust, retention, and awareness, delivering impactful outcomes.