Real-time bidding for online advertising

Abstract

The real-time bidding (RTB), aka programmatic buying, has recently become the fastest growing area in online advertising. Instead of bulking buying and inventory-centric buying, RTB mimics stock exchanges and utilises computer algorithms to automatically buy and sell ads in real-time; It uses per impression context and targets the ads to specific people based on data about them, and hence dramatically increases the effectiveness of display advertising. In this paper, we provide an empirical analysis and measurement of a production ad exchange. Using the data sampled from both demand and supply side, we aim to provide first-hand insights into the emerging new impression selling infrastructure and its bidding behaviours, and help identifying research and design issues in such systems. From our study, we observed that periodic patterns occur in various statistics including impressions, clicks, bids, and conversion rates (both post-view and post-click), which suggest timedependent models would be appropriate for capturing the repeated patterns in RTB. We also found that despite the claimed second price auction, the first price payment in fact is accounted for 55.4% of total cost due to the arrangement of the soft floor price. As such, we argue that the setting of soft floor price in the current RTB systems puts advertisers in a less favourable position. Furthermore, our analysis on the conversation rates shows that the current bidding strategy is far less optimal, indicating the significant needs for optimisation algorithms incorporating the facts such as the temporal behaviours, the frequency and recency of the ad displays, which have not been well considered in the past.

User Response Learning for Directly Optimizing Campaign Performance in Display Advertising

“…It is particularly important to control the over spending as some of RTB auctions are in fact the first price auction or with soft floor prices [29]. Table 7 gives the statistics related to high bid prices, where the bid value exceeds the highest market price 300 in our dataset.…”

“…Note that in the second price auction, the game theoretical approach and the rational assumption lead to a truthful bidding, independent of market price [11]. However, empirical studies have shown that advertisers are quite often not rational in RTB [29] and in this paper, we take a stochastic approach by following [2].…”

Adaptive Targeting for Online Advertisement

“…Ad exchanges as well as search providers use Real-Time Bidding (RTB), which is a popular way of delivering online advertising, see [3,9,13,20]. As reported in [5], spending on RTB in the US during 2014 increased by 137% and reached $10 billion and RTB has 45% of the total spend in online advertising.…”

“…Marketing managers expect that online advertising brings customers at cheaper costs and granular targeting capabilities although the traditional offline advertisement is continued. In Figure 1 we show the scheme of the RTB system, which consists of 4 components: a user, a webpage with embedded ad place, demand partners (advertising platforms) and ad campaigns; see [17,20] for more detail.…”

Back-Office Web Traffic on The Internet

“…In 2013, online advertising revenues in the United States were estimated to be $42.8 billion [2], an increase of 17% over the previous year. The increasing revenue stream of Web advertisement has given rise to another innovative part of the Web ecosystem: ad-sellers, ad-bidders, and ad-brokers-the adnetworks [10,59]. These parties negotiate placement of advertisements in today's Web.…”