NDCG (Normalized Discounted Cumulative Gain)

What is NDCG?

NDCG evaluates how well a ranked list orders items by relevance grades (e.g., 0–3), discounting gains by rank so higher spots matter more, then normalizing by the ideal ordering.

How It Works (quick)

• DCG: Sum of graded relevance discounted by log position.
• IDCG: DCG of the ideal (perfect) order.
• NDCG = DCG/IDCG: Typically reported at @k (e.g., NDCG@10).
• Labels: From judgments, clicks (debiased), or purchases.

Why It Matters in E-commerce

• Correlates with CTR/conversion better than raw precision.
• Lets teams compare rankers across categories/locales.

Best Practices

• Use graded labels (click, add-to-cart, purchase).
• Report per category/locale and aggregate with weights.
• Track confidence intervals and drift over time.

Summary

NDCG is the go-to relevance metric: grade items, discount by rank, normalize, and compare.