Validation Using Quantitative Data

What Is Quantitative Validation

Quantitative validation is the process of using mathematical and statistical techniques to verify that a model is performing as intended. Instead of relying on gut feelings, analysts use "hard data" to test the model's accuracy, logic, and stability. This typically involves running historical data through the model to see if the outputs match known outcomes (backtesting), checking how the model reacts to extreme market shifts (stress testing), and ensuring the underlying code is free of errors. Essentially, it's a rigorous "stress test" for formulas to ensure they remain reliable when real money or decisions are on the line.

Data Table

Table 1.1: Marketing data from Product B in a month
Day Budget Impressions Clicks Leads Reservations
1 $1.86 26 7 1 0
2 $4.58 47 29 4 0
3 $10.14 431 55 5 0
4 $15.45 477 60 7 0
5 $16.28 520 69 11 0
6 $19.59 581 73 11 0
7 $20.95 824 75 12 0
8 $25.45 828 82 14 1
9 $26.70 1239 86 14 1
10 $26.91 1321 100 15 1
11 $27.19 1737 113 16 1
12 $36.04 1747 121 20 1
13 $41.32 1789 152 21 1
14 $43.45 2713 155 22 1
15 $54.99 2844 169 24 1
16 $57.53 3107 175 27 1
17 $60.19 3243 178 27 1
18 $66.38 3289 194 27 1
19 $71.04 3381 199 29 1
20 $71.17 3399 200 33 2
21 $72.48 3719 201 33 2
22 $75.51 3995 202 34 2
23 $76.12 4187 213 35 2
24 $77.62 4495 219 36 2
25 $81.81 4544 222 36 2
26 $85.57 4596 230 36 2
27 $93.84 4596 245 37 2
28 $102.04 4603 261 37 2
29 $105.24 4613 275 37 2
30 $110.73 4737 299 38 2

Analysis

To validate your product using these metrics, you must perform a funnel-down analysis that compares your real-world performance against your target benchmarks. You start at the top of the funnel by assessing creative resonance (CTR) and market cost (CPM), then move to the middle to evaluate landing page conversion (L-CR), and finally calculate the "Bottom Line" by applying your pessimistic, realistic, and optimistic purchase probabilities to your Lead and Reservation totals. Validation occurs when the Realistic eROAS (Estimated Return on Ad Spend) is calculated by multiplying your total projected conversions by the product price and dividing it by the Ad Spend; if that figure exceeds 200%, the product is quantitatively "validated."

In this case, the validation failed because of the calculation results

Key terms

Budget
The amount of money allocated to spend on that day for marketing
Impressions
The total amount of the times the ad appeared
Clicks
The number of times users actually interacted with the ad
Leads
Potential customers who shared their contact info or showed direct interest
Reservations
Confirmed bookings or saved spots, usually representing a final conversion