13,368 research outputs found

    Managing Risk of Bidding in Display Advertising

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    In this paper, we deal with the uncertainty of bidding for display advertising. Similar to the financial market trading, real-time bidding (RTB) based display advertising employs an auction mechanism to automate the impression level media buying; and running a campaign is no different than an investment of acquiring new customers in return for obtaining additional converted sales. Thus, how to optimally bid on an ad impression to drive the profit and return-on-investment becomes essential. However, the large randomness of the user behaviors and the cost uncertainty caused by the auction competition may result in a significant risk from the campaign performance estimation. In this paper, we explicitly model the uncertainty of user click-through rate estimation and auction competition to capture the risk. We borrow an idea from finance and derive the value at risk for each ad display opportunity. Our formulation results in two risk-aware bidding strategies that penalize risky ad impressions and focus more on the ones with higher expected return and lower risk. The empirical study on real-world data demonstrates the effectiveness of our proposed risk-aware bidding strategies: yielding profit gains of 15.4% in offline experiments and up to 17.5% in an online A/B test on a commercial RTB platform over the widely applied bidding strategies

    Real-Time Bidding by Reinforcement Learning in Display Advertising

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    The majority of online display ads are served through real-time bidding (RTB) --- each ad display impression is auctioned off in real-time when it is just being generated from a user visit. To place an ad automatically and optimally, it is critical for advertisers to devise a learning algorithm to cleverly bid an ad impression in real-time. Most previous works consider the bid decision as a static optimization problem of either treating the value of each impression independently or setting a bid price to each segment of ad volume. However, the bidding for a given ad campaign would repeatedly happen during its life span before the budget runs out. As such, each bid is strategically correlated by the constrained budget and the overall effectiveness of the campaign (e.g., the rewards from generated clicks), which is only observed after the campaign has completed. Thus, it is of great interest to devise an optimal bidding strategy sequentially so that the campaign budget can be dynamically allocated across all the available impressions on the basis of both the immediate and future rewards. In this paper, we formulate the bid decision process as a reinforcement learning problem, where the state space is represented by the auction information and the campaign's real-time parameters, while an action is the bid price to set. By modeling the state transition via auction competition, we build a Markov Decision Process framework for learning the optimal bidding policy to optimize the advertising performance in the dynamic real-time bidding environment. Furthermore, the scalability problem from the large real-world auction volume and campaign budget is well handled by state value approximation using neural networks.Comment: WSDM 201

    Managing Risk of Bidding in Display Advertising

    Get PDF
    In this paper, we deal with the uncertainty of bidding for display advertising. Similar to the financial market trading, real-time bidding (RTB) based display advertising employs an auction mechanism to automate the impression level media buying; and running a campaign is no different than an investment of acquiring new customers in return for obtaining additional converted sales. Thus, how to optimally bid on an ad impression to drive the profit and return-on-investment becomes essential. However, the large randomness of the user behaviors and the cost uncertainty caused by the auction competition may result in a significant risk from the campaign performance estimation. In this paper, we explicitly model the uncertainty of user click-through rate estimation and auction competition to capture the risk. We borrow an idea from finance and derive the value at risk for each ad display opportunity. Our formulation results in two risk-aware bidding strategies that penalize risky ad impressions and focus more on the ones with higher expected return and lower risk. The empirical study on real-world data demonstrates the effectiveness of our proposed risk-aware bidding strategies: yielding profit gains of 15.4% in offline experiments and up to 17.5% in an online A/B test on a commercial RTB platform over the widely applied bidding strategies

    Impression Effect vs. Click-through Effect: Mechanism Design of Online Advertising

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    Search advertising and display advertising are two major online advertising formats. Search advertising emphasizes ads’ click-through effect. Advertisers only pay when users click the link of their ads. Traditional display advertising emphasizes ads’ impression effect. Most display ads are charged based on the number of views on the ads. Considering that most online ads increase brand awareness (impression effect) and directly promote sales (click-through effect), the not-emphasized effect in search advertising or display advertising actually has a significant impact on the market outcome. However, these impacts have been largely ignored. In this paper, we examine various mechanisms in search and display advertising by considering both ads’ impression effect and click-through effect. Interestingly, we show a seesaw relationship between ads’ two effects in search advertising. The advertiser whose advertisement has a strong click-through effect benefits relatively less from its impression effect. In display advertising, the real-time-bidding (RTB) mechanism considers both ads’ impression effect and click-through effect. It allows a publisher to gain more surplus than that through a static auction. However, we show that RTB is associated with a high risk of market failure

    A dynamic pricing model for unifying programmatic guarantee and real-time bidding in display advertising

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    There are two major ways of selling impressions in display advertising. They are either sold in spot through auction mechanisms or in advance via guaranteed contracts. The former has achieved a significant automation via real-time bidding (RTB); however, the latter is still mainly done over the counter through direct sales. This paper proposes a mathematical model that allocates and prices the future impressions between real-time auctions and guaranteed contracts. Under conventional economic assumptions, our model shows that the two ways can be seamless combined programmatically and the publisher's revenue can be maximized via price discrimination and optimal allocation. We consider advertisers are risk-averse, and they would be willing to purchase guaranteed impressions if the total costs are less than their private values. We also consider that an advertiser's purchase behavior can be affected by both the guaranteed price and the time interval between the purchase time and the impression delivery date. Our solution suggests an optimal percentage of future impressions to sell in advance and provides an explicit formula to calculate at what prices to sell. We find that the optimal guaranteed prices are dynamic and are non-decreasing over time. We evaluate our method with RTB datasets and find that the model adopts different strategies in allocation and pricing according to the level of competition. From the experiments we find that, in a less competitive market, lower prices of the guaranteed contracts will encourage the purchase in advance and the revenue gain is mainly contributed by the increased competition in future RTB. In a highly competitive market, advertisers are more willing to purchase the guaranteed contracts and thus higher prices are expected. The revenue gain is largely contributed by the guaranteed selling.Comment: Chen, Bowei and Yuan, Shuai and Wang, Jun (2014) A dynamic pricing model for unifying programmatic guarantee and real-time bidding in display advertising. In: The Eighth International Workshop on Data Mining for Online Advertising, 24 - 27 August 2014, New York Cit

    Dimensionality reduction for click-through rate prediction: Dense versus sparse representation

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    In online advertising, display ads are increasingly being placed based on real-time auctions where the advertiser who wins gets to serve the ad. This is called real-time bidding (RTB). In RTB, auctions have very tight time constraints on the order of 100ms. Therefore mechanisms for bidding intelligently such as clickthrough rate prediction need to be sufficiently fast. In this work, we propose to use dimensionality reduction of the user-website interaction graph in order to produce simplified features of users and websites that can be used as predictors of clickthrough rate. We demonstrate that the Infinite Relational Model (IRM) as a dimensionality reduction offers comparable predictive performance to conventional dimensionality reduction schemes, while achieving the most economical usage of features and fastest computations at run-time. For applications such as real-time bidding, where fast database I/O and few computations are key to success, we thus recommend using IRM based features as predictors to exploit the recommender effects from bipartite graphs.Comment: Presented at the Probabilistic Models for Big Data workshop at NIPS 201
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