This question has a lot of layers and I didn't pace myself well.
Start by clarifying that a single CTR value is meaningless without a benchmark or comparison group, so you must define a null hypothesis (e.g., CTR equals a baseline or industry average) and an alternative. Then select the appropriate test (one-sample proportion z-test or two-proportion z-test if comparing to a control), compute the p-value and confidence interval, and finally interpret both statistical and practical significance in the context of business goals.
Pro tip: Always ask about the baseline or control group first—without it, you can't test anything. Also, mention that at Meta's scale, even tiny differences can be statistically significant, so practical significance (effect size and business impact) matters more.
Ask what the 4.2% is being compared to (e.g., historical baseline, control group, industry benchmark). Then state the null hypothesis (H0: CTR = baseline) and alternative (H1: CTR ≠ baseline or > baseline).
If comparing to a known baseline proportion, use a one-sample z-test for proportions. If comparing two groups (e.g., campaign vs. control), use a two-proportion z-test. Ensure assumptions (independence, sample size) are met.
Collect sample size (n), number of clicks (x), and baseline proportion (p0). Compute the z-statistic: z = (p_hat - p0) / sqrt(p0*(1-p0)/n). Then find the p-value from the standard normal distribution.
Calculate a 95% confidence interval for the true CTR using p_hat ± z* * sqrt(p_hat*(1-p_hat)/n). This gives a range of plausible values for the population CTR.
Compare p-value to alpha (e.g., 0.05) to determine statistical significance. Then assess practical significance by considering effect size, business impact, and whether the difference is large enough to matter for decision-making.
AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.