# Response Transformation and Profit Decomposition for Revenue Uplift Modeling

arXiv: https://arxiv.org/abs/1911.08729 · HTML: https://mlsanity.com/paper/1911.08729/

## Key facts

- Cited by 15 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 20 Nov 2019.

## Built on by (most cited first, 15 of 15)

- [Rankability-enhanced Revenue Uplift Modeling Framework for Online Marketing](https://mlsanity.com/paper/2405.15301/) (2024)
- [Uplift Modeling: from Causal Inference to Personalization](https://mlsanity.com/paper/2308.09066/) (2023)
- [Meta-Learners for Estimation of Causal Effects: Finite Sample Cross-Fit Performance](https://mlsanity.com/paper/2201.12692/) (2022)
- [Uplift modeling with continuous treatments: A predict-then-optimize approach](https://mlsanity.com/paper/2412.09232/) (2024)
- [Incremental Profit per Conversion: a Response Transformation for Uplift Modeling in E-Commerce Promotions](https://mlsanity.com/paper/2306.13759/) (2023)
- [Uplift vs. predictive modeling: a theoretical analysis](https://mlsanity.com/paper/2309.12036/) (2023)
- [To do or not to do: cost-sensitive causal decision-making](https://mlsanity.com/paper/2101.01407/) (2021)
- [Interpretable Multiple Treatment Revenue Uplift Modeling](https://mlsanity.com/paper/2101.03336/) (2021)
- [Optimal Targeting in Fundraising: A Causal Machine-Learning Approach](https://mlsanity.com/paper/2103.10251/) (2021)
- [Improving uplift model evaluation on RCT data](https://mlsanity.com/paper/2210.02152/) (2022)
- [The impact of heteroskedasticity on uplift modeling](https://mlsanity.com/paper/2312.05234/) (2023)
- [Are causal effect estimations enough for optimal recommendations under multitreatment scenarios?](https://mlsanity.com/paper/2410.05177/) (2024)
- [Direct Profit Estimation Using Uplift Modeling under Clustered Network Interference](https://mlsanity.com/paper/2509.01558/) (2025)
- [VALOR: Value-Aware Revenue Uplift Modeling with Treatment-Gated Representation for B2B Sales](https://mlsanity.com/paper/2604.02472/) (2026)
- [Personalizing Marketplace Policies with Competing Objectives and Constrained Experiments: Evidence from a Job Marketplace](https://mlsanity.com/paper/2606.30932/) (2026)

## Abstract (arXiv)

Uplift models support decision-making in marketing campaign planning. Estimating the causal effect of a marketing treatment, an uplift model facilitates targeting communication to responsive customers and efficient allocation of marketing budgets. Research into uplift models focuses on conversion models to maximize incremental sales. The paper introduces uplift modeling strategies for maximizing incremental revenues. If customers differ in their spending behavior, revenue maximization is a more plausible business objective compared to maximizing conversions. The proposed methodology entails a transformation of the prediction target, customer-level revenues, that facilitates implementing a causal uplift model using standard machine learning algorithms. The distribution of campaign revenues is typically zero-inflated because of many non-buyers. Remedies to this modeling challenge are incorporated in the proposed revenue uplift strategies in the form of two-stage models. Empirical experiments using real-world e-commerce data confirm the merits of the proposed revenue uplift strategy over relevant alternatives including uplift models for conver-sion and recently developed causal machine learning algorithms. To quantify the degree to which improved targeting decisions raise return on marketing, the paper develops a decomposition of campaign profit. Applying the decomposition to a digital coupon targeting campaign, the paper provides evidence that revenue uplift modeling, as well as causal machine learning, can improve cam-paign profit substantially.