Estimate revenue of organic shopping tab
Overview
This question evaluates a data scientist's skills in revenue modeling, funnel construction, causal inference for bias correction, experimentation scaling, and sensitivity analysis using organic engagement and purchase metrics.
Estimate Monthly Revenue for a New Shopping Tab (Organic Only)
Context
You are evaluating the potential monthly revenue impact of launching a new Shopping tab in a social photo app. Only organic surfaces are in scope (organic posts and in-app search). Exclude ads and any paid placements.
You have access to the following data from current organic experiences:
- Organic impression counts (e.g., product tiles in feed, creator posts with product tags, organic search results)
- Product detail page (PDP) views
- Add-to-carts (ATC)
- Purchases (in-app)
- Average order value (AOV)
Assume purchases are on-platform and can be linked to prior organic exposures.
Task
Using the available data, estimate monthly potential revenue if the Shopping tab is launched to 100% of users. Provide:
(a) A clearly specified conversion funnel and algebraic formula for revenue.
(b) How you would obtain unbiased CTR/PDP rates from current organic entry points (given position/selection biases).
(c) How you would adjust for cannibalization of existing organic purchases.
(d) How you would scale from experiment traffic to the full population while accounting for heterogeneity.
(e) A sensitivity analysis on the key assumptions and parameters.
Solution
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