Conversion rate estimation

A simple probabilistic model that calculates a website conversion rate given two params (number of total visitors and number of conversions). The output measures uncertainty about the true value of conversion rate

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from iframer import *

What is Conversion Rate?

Conversion rate measures how many users complete a desired goal (a conversion) compared to the total number of users. It's usually calculated as a fraction $n/N$ where $n$ is number of conversions and $N$ - total number of visitors. The output of such model is deterministic and shows only what it calculates - the proportion of visitors during specific period. On the contrary, a probabilistic model encorporates uncertainty about true conversion rate.


$$ \begin{align} Rate \sim \text{Uniform(0,1)} \\ Conversions \sim \text{Binomial(Rate, N)} \\ p(Rate|Conversions, N) \varpropto p(Conversions|Rate, N) p(Rate) \\ \end{align} $$

Model contains an uninformative uniform prior and a binomial distribution to evaluate log-likelihood of provided data (Number of trials, Conversions)

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By Anton Zemlyansky in
Tags : #Finance, #Calculators,