Uplift Modeling: Budget-Constrained Targeting on Criteo

This project designs targeting policies that maximize incremental impact, not just predicted conversion.

Executive Briefing: CATE-Driven Budget Allocation

• The Challenge: Deploying a mass marketing campaign across 25M rows under strict budget constraints causes massive financial leakage if managed traditionally. A baseline strategy of random targeting yields a devastating -96% ROI. Meanwhile, traditional propensity models fail because they waste spend on "sure things" (users who would have converted anyway without an incentive).

• The Solution: We translated individual Conditional Average Treatment Effect (CATE) point estimates from a tuned Causal Forest into an optimized, budget-constrained targeting policy object (TargetingPolicy).

• The Business Impact: Our policy extracts 2,291 incremental conversions out of a $10,000 budget, outperforming random allocation by 5.7x and dropping the campaign’s structural breakeven floor to $4.36 per conversion. For high-value customer tiers where an outcome is worth $5.00, this shifts the campaign from a massive loss-leader into a profitable engine yielding a +14.5% net ROI at scale, and up to +183% ROI on conservative, highly surgical spends.

Overview

An end-to-end uplift modeling pipeline built on the Criteo Uplift dataset (~25M rows), estimating heterogeneous treatment effects to inform budget-constrained marketing targeting decisions. Rather than predicting who is most likely to convert, this project identifies who is most likely to convert because of treatment, the "persuadables" segment that drives incremental value from a marketing intervention.

Four causal inference approaches are implemented and rigorously compared on held-out test data: T-Learner, S-Learner, X-Learner, and Causal Forest.

Results

1. Algorithmic Ranking Performance

2. Policy Simulation Framework (Fixed Budget = $10,000, Cost/Contact = $0.18)

All four models substantially outperform random targeting on the held-out test set.

See notebooks/04_evaluation.ipynb or results.png for full Qini curve analysis and discussion.
See notebooks/05_business_simulation.ipynb for budget sensitivity charts and joint frontier optimization plots.

Key Findings

• Randomization quality validated: covariate balance and propensity score overlap analysis confirmed the underlying experiment was well-randomized (ROC-AUC ≈ 0.51 for treatment prediction from covariates)

• T-Learner's independent-model design is vulnerable to group imbalance: with an 85/15 treatment/control split, the control model's reduced sample size introduced measurable bias

• X-Learner's cross-imputation directly corrects this weakness, producing the closest average uplift estimate to the empirical ATE among all meta-learners

• Causal Forest outperforms all meta-learners when leaf size is tuned relative to outcome rarity (a leaf of 450+ samples is needed for stable estimates at a ~4.7% positive outcome rate)

• A critical scale_pos_weight calibration bug was diagnosed in X-Learner: class-imbalance correction in stage-1 models, while necessary for T-Learner and S-Learner, directly corrupts X-Learner's cross-imputed targets since there is no second model to cancel the bias against

• Propensity targeting triggers marketing cannibalization: Prioritizing users based on baseline conversion probability underperforms the CATE policy, proving that standard ML models waste budget by targeting organic converts who do not require an incentive.

• The Efficiency Frontier exhibits distinct diminishing returns: Sensitivity analyses show that a 10x expansion in marketing spend (from $1k to $10k) yields only a 4x increase in incremental lift. This forces the true breakeven cost per conversion up from $1.77 to $4.36, establishing an explicit operational roadmap for campaign profitability based on product margins.

Project Structure

Dataset

This project leverages the Criteo Uplift Prediction Dataset v2 (~25M rows). To optimize local memory allocation and stream data seamlessly, the pipeline utilizes the memory-mapped Hugging Face repository at criteo/criteo-uplift.

Setup

git clone https://github.com/suehuynh/uplift-modeling
cd uplift-modeling
pip install -e .
pytest tests/ -v

git clone https://github.com/suehuynh/uplift-modeling
cd uplift-modeling
pip install -e .
pytest tests/ -v

git clone https://github.com/suehuynh/uplift-modeling
cd uplift-modeling
pip install -e .
pytest tests/ -v

Tech Stack

Python, EconML, XGBoost, scikit-learn, pandas, matplotlib, pytest

Contact

Sue Huynh

• Email: nguyen_huynh@brown.edu

• GitHub: https://github.com/suehuynh

Report completed: Summer 2026