Yield Optimization of Display Advertising with Ad Exchange

It is clear from the growing role of ad exchanges in the real-time sale of advertising slots that Web publishers are considering a new alternative to their more traditional reservation-based ad contracts. To make this choice, the publisher must trade off, in real-time, the short-term revenue from ad...

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Veröffentlicht in:Management science Jg. 60; H. 12; S. 2886 - 2907
Hauptverfasser: Balseiro, Santiago R., Feldman, Jon, Mirrokni, Vahab, Muthukrishnan, S.
Format: Journal Article
Sprache:Englisch
Veröffentlicht: Linthicum INFORMS 01.12.2014
Institute for Operations Research and the Management Sciences
Schlagworte:
Advertisements
Advertising
Algorithms
Analysis
Approximation
Bid prices
Bids
Data quality
Dynamic programming
dynamic programming-optimal control
Electronic publishing
Internet
Internet advertising
Internet/Web advertising
Inventory
Management science
Marketing
Mathematical optimization
Online advertising
Opportunity costs
Optimization
Optimization algorithms
Pareto optimum
Prices
Publishing industry
Revenue
Revenue management
Sponsored search
Stochastic models
Stochastic processes
Studies
Trade-off
Wage & price controls
United States
ISSN:0025-1909, 1526-5501
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Beschreibung
Zusammenfassung:It is clear from the growing role of ad exchanges in the real-time sale of advertising slots that Web publishers are considering a new alternative to their more traditional reservation-based ad contracts. To make this choice, the publisher must trade off, in real-time, the short-term revenue from ad exchange with the long-term benefits of delivering good spots to the reservation ads. In this paper we formalize this combined optimization problem as a multiobjective stochastic control problem and derive an efficient policy for online ad allocation in settings with general joint distribution over placement quality and exchange prices. We prove the asymptotic optimality of this policy in terms of any arbitrary trade-off between the quality of delivered reservation ads and revenue from the exchange, and we show that our policy approximates any Pareto-optimal point on the quality-versus-revenue curve. Experimental results on data derived from real publisher inventory confirm that there are significant benefits for publishers if they jointly optimize over both channels. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2017 . This paper was accepted by Dimitris Bertsimas, optimization.
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ISSN:0025-1909
1526-5501
DOI:10.1287/mnsc.2014.2017