Short Communication
Parameter estimation and objective definition
in mean-variance media scheduling
C.A. de K L U Y V E R
Purdue University, West ;Lafayette, IN, U.S.A.
D.C. McNICKLE
University o f Canterbury, Christchurch, New Zealand
Received August 1979
Revised April 1980
In a recent article [3], the use of mean-variance analysis
was considered as an alternative approach for media scheduling.
This note extends these results with particular emphasis on the
estimation of model parameters and increasing solution efficacy.
Issues such as (1) the testing for independence in the under-
lying probability structure, (2) estimation of exposure proba-
bilities and the use of samplingvariances, (3) the specification
of an objective function, and (4) ex post evaluation of sche-
dule frequency obtained are briefly discussed.
The authors are indebted to Professor W.W.Cooper of
Harvard University for his constructive comments to an earlier
draft of this article.
1. A test for independence of exposure probabilities
The mean-variance tbrmulation [3] uses a binomial
probabihty structure in deriving the expressions for
the expected kth gross audience segment realized, the
expected kth net audience segment obtained, schedule
frequency and their variances. Specifically, if p~(t)
denotes the probability that an individual in audience
segment k is exposed to t h e / t h cumulative insertion in
medium i at time t, it is shown that the distribution of
the size of the kth gross audience segment for medium
i, denoted d~(t), is binomial with success probability
© North-Holland Publishing Company
European Journal of Operational Research 6 (1981) 80-83
80
q~i(t), where
q~i(t) = (1 - pkl (t)). (1 -- pk(t)) ... (1 -- p~l(t)). (1)
Similarly, the size of the kth net audience segment
obtained given/(i) cumulative purchases in media i =
1,2, ...,I in p.eriod t, denoted d/~(t), is distributed
binomially with success probability
I
Q~(i)(t) = I-I q~(t) . (2)
i= 1
Implicit in these developments is the assumption
that the kth audience segment is relatively homoge-
neous. While care is taken to create a substantial degree
of internal homogeneity in the segmentation process,
it is advisable in practice to test whether individuals
within the same audience segment have an approxima-
tely equal chance of being exposed, i An appropriate
test for this assumption would be to consider an hypo-
thesis of equal proportionate exposure between diffe-
rent subsections of the same audience segment. Thus,
if there is reason to believe that the ith medium audi-
ence in the kth market segment, D~(t), contains a sub-
section D~k(t) for which the exposure probabilities
p~(t), ] = 1, 2, ..., J, are substantially different, a suit-
able test statistic is given by
-
pij (t)
- p). (i/,;+ i/,,')!' (s)
where n and n' are the respective sample sizes and p
represents a pooled estimate of the proportion of indi-
viduals exposed in segment k. If the exposure probabili.
ties are equal, (3), of course, will be normally distribu-
ted.
1 Of course, the very reason for segmenting the total audience
is to create segments with a high degree of internal homo-
geneity as compared to likeness among segments. For
example, d~](t) might refer to the number of women aged
25 to 34 (k) exposed via a purchase of/insertions in Time
magazine (i) in period t.
 CA. de Kluyver, D.C. McNickle /Parameter estimation and ob/ective definition
2. Estimation of exposure probabilities
The test proposed above assumes that the imple-
mentation of the model is based on estimates for the
probability structure p~(t). While such estimates can
sometimes be obtained, e.g. in test market situations,
it is generally more efficient to estimate the joint pro-
babilities q~(t) directly from campaign monitoring
data. 2 When the latter course is taken, the variance
expression for expected gross audience derived in [3 ]
no longer applies as this expression only reflects the
likely error in the joint probabilities q~(t) due to ran-
donmess of exposure through the p~(t) l! probability
structure. However, since we are primarily concerned
with the reli~,bility of exposure estimates, it seems
reasonable to employ the mean-variance format to
include other sources of variation, e.g. sampling error,
in the model. Thus, if q~(t) estimates are obtained
directly, their variances may be used to augment or
replace the expressions in [3]. In particular, if ~ ( t )
is an unbiased estimate of q~(t), obtained in a random
sample of size n, the expected size of the kth gross
audience segment for medium i is given by
D~(t)-(1 -- tt))
forj = 1, 2, ...,J, and its variance by
[D~(t)] =- 0~/(t). (1 - O~/(t))/n.
Also note that the above procedure does not require
any assumptions regarding the nature of the underlying
probability structure p~(t), since (4) and (5), and simi-
lar expressions for net audience segments derived in
[3] only depend on the joint probabilities q~(t). Hence
the distribution of p~(t) and the associated indepen-
dence assumptions need only be considered if frequency
controls are included in the model (see Section 4).
81
the expected size of the kth net audience segment and
its variance given/(i) cumulative insertions in medium
i, i = 1,2, ...~I, are given by
E~(o(t) = Dk(t) • (1 - Q~i)(t)) (6)
and
V~(o(t) = Dk(t) " (1 - Q~(i)(t)) " Q~(i)(t) , (7)
where Dk(t) denotes the combined media audience in
the kth market segment. Using (6), net audience con-
straints of the type E~(i)(t) f> Nk(t) may be derived as
~ In(1 - p~i(t)) xii(t) >~In[(1 - Nk(t))/Dk(t)]
t (8)
using a logarithmic transformation similar to that
employed by Charnes et al. [ 1]. 3 Unfortunately, the
logarithmic transformation makes it difficult to obtain
an explicit representation of the variance of the kth
net audience segment. To resolve this problem, we
consider the use of an incremental argument similar
to that employed for gross audience statistics. Speci-
fically, if Q~(o(t) denotes the probability that an indi-
(4) vidual in segment k is not exposed at least once given
](/) cumulative insertions in medium i, i = 1,2, ..., I,
the effect of an additional insertion in any of the
(5) media may be represented by a revision of this proba-
bility to Q~(i)(t). Without loss of generality, assume
the additional insertion was made in medium i'. Then
Q~,(i)(t) = [1-[ q~.(t)] "qi~,i+ l (t)
i~ i'
= Q~.(i)(t) . [1 - Pi~i+ l (t)] . (9)
Thus the incremental expected kth net audienc~
obtained by the additional insertion in medium i' is
given by

3. Objective function specification Z~o(t)=Dk(t ) • [Q~(o(t)-Q~.(i)(t)] (10)

= Dk(t) • Q~i)(t). [1 - p~j+ l(t)]
The model in [3] seeks to minimize the variance of
gross audience segments obtained. It may be desirable with incremental variance 4
to balance risk in terms of several sources of schedule AV~i)(t)=Dk(t ) • [(Q~(i)(t)) 2 -(1 -(1 - Pik'i + l(t))2)
variance, viz. variance of gross audience segments, net
audience and frequency, in a single objective. This may - Q~i)(t) "P~i+ 1(t)] (11 )
be accomplished by recasting the net audience expres-
sions derived in [3] in incremental form. Recall that
3 As noted by Professor Cooper, expression (8) is related to
the more gener',d Khinchin-Kullback-Leibler statistic in
2 If ~t(J .t ) , i .= 1, 2, " ' " , J are unbiased estimates
g
of. q~(t)
ft.
information theory. For further details on this aspect, see e.g.
b.ased on z.ndependen.t random samples, p~<t) zs estzmated by Sakaguchi [5] or Charnes, Cooper and Learner [2 ].
K' _ ,.,K ., ,,K "
p (t) - - 4 See footnote 4 in [3].
82 C.A. de Kluyver, D.C. MeNickle /Parameterestimation and ob/ective definition
yielding net audience restrictions of the form
~ ~ ( O ( t ) . Xo(t ) >t Nk(t)
i i
with variance
~ AV~.(i)(t).Xi/(t ) .
i /
The additional flexibility in modeling schedule vari-
ance gained by the above linearization is obtained at
the expense of additional estimation, requirements.
Also, of course, this procedure assumes independence
between successive insertions and between the diffe-
rent media whereas the logarithmic form (8) does not
require independence (see Charnes et al. [ 1], and [3 ] ).
In effect, insertions in different media are treated in
(9) as successive purchases directed at the same target
audience.
The variance of schedule frequency is readily speci-
fied. Noting that the expected number of exposures
for an individual in segment k given/cumulative inser-
tions in medium i in period t is given by
P~l (t) + p~2(t) + "'" + p~](t) ,
the underlying distribution is recognized as generalized
binomial in which the probability of 'success' is diffe-
rent for each 'trial'. Hence, the variance of exposure
frequency may be written as (see [4])
~ p ~ ( t ) . [1 p}(t)] • Xi/(t ) .
i !
Using (13) and (15), the model in [3] may be
refined to minimize a weighted linear combination of
schedule variances. The revised objective takes the
form
Min WG" ~ ~ ~ ~AV~(t)'Xij(t)
t k i i
+ WN" ~ ~ ~ ~ AV~(i)(t), Xi/(t)
~ k i /
t k i j
where the v~eights WG, WN, and WF reflect the relative
importance attached to the different sources of sche-
dule variance by the media planner.
4. Ex post evaluation of schedule frequency
(12) Charnes et al. [ 1] first expressed concern regarding
the use of average frequency as the sole measure of fre-
quency control based on the observation that average
frequency is relatively insensitive to the form of the
underlying probability distribution. That is, regardless
(13) of the degree of correlation between audience seg-
ments obtained with successive insertions the expected
number of individuals exposed by the/th advertise-
ment in medium i is D~(O" p~(t). However, this rela-
tive insensitivity does not apply in the case of the vari-
ance of exposure frequency, and hence, the form of
the entire frequency distribution. For example, if au-
dience segrr~.entsare highly correlated, the distribution
of frequency may become bimodal. In the extreme
case of perfectly correlated audiences, and constant
exposure probabilities p~i(t)= p~(t), the distribution
degenerates to a two-point form, where a fraction
p~(t) of audience segment k has been exposed / times
and the remainder not at all. The variance in that
case may be shown to be (/2). p~(t). [1 - p~(t)],/
times as large as the variance resulting under binomial
assumptions.
(14) Thus, a mean-frequency or a mean-variance fre-
quency approach must be used with caution, particu-
larly if the validity of the binomial model is questioned.
To alleviate this concern, the following ex post method
of determining the entire distribution of frequencies
obtained is useful. Noting that the probability of an
individual being exposed r times is given by the coeffi-
(15) cient of z r in the generating function of the generalized
binomial probability distribution given by
GO) = [p~.(t) .z + (1 - p~(t)] (17)
the entire frequency distribution obtained may be
computed by recursively evaluating these coefficients
as
a[ = [1 -p~l(t)] , a[ =p~l(t) (18)
and
d;+` = [1 - p~(t)] • a~ + p~(t), ar_,i , (19)
where r = 1,2, ...,/+ 1 a n d / = 1,2, ...,& The resulting
vectors (a~, a{, ..., all) define the required frequency
distribution given ] cumulative insertions in medium i,
and may be used as an ex post means for schedule assess-
(16) ment or, alternatively, to formulate frequency controls, s
S For example, the results in (18) and (19) may be used to
define frequency constraints controlling specific fractiles of
the audience exposed r or more times, (see Charnes et ~l.
[11).
 C.A. de Kluyver, D.C. McNickle /Parameter estimation and objective definftion 83

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W. Reinecke, A goal programming model for media plan-
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