I am curious to find out the confidence level of results. It’s best to give an example of what I mean cause I struggle to speak in the technical terms.
Jack runs an advertisement that 1000 people see. 10 of those people convert and actually purchase something. Jack is sure his conversion rate is 1%.
Sally disagrees. She thinks Jack doesn’t have enough of a statistical confidence level in this result. What is the confidence level of 1% being the result.
A formula to get that would be great.
I’m trying to add a statistical element to my marketing for my business. I plan to run a lot of advertisements so am trying to find a way to understand how many results I need to collect before I can prove or disprove a hypothesis I am testing.
Let’s say for example my hypothesis is that running a certain ad will result in a conversion rate of 3% of people clicking the ad overtime.
For now, let’s say I have just started the experiment and out of 1000 people, 30 did click it. So it seems that the the conversion rate (or probability of a person click the ad) is 3% (0.03 in probability).
However, I shouldn’t trust these results because the sample size is too small. Instead I want to know what is probability that 3% (+ or – a margin of error) is indeed the conversion rate?
I thought I’d have to use a confidence intervals but now I’m thinking I should probably something that involves variance. I’ll do some more research and update this when I find more. If you have any thoughts in the mean time on how to solve this problem, please let me know. Much obliged.