Mathematics – Optimization and Control
Scientific paper
2011-02-13
Mathematics
Optimization and Control
Scientific paper
In light of the growing market of Ad Exchanges for the real-time sale of advertising slots, publishers face new challenges in choosing between the allocation of contract-based reservation ads and spot market ads. In this setting, the publisher should take into account the tradeoff between short-term revenue from an Ad Exchange and quality of allocating reservation ads. In this paper, we formalize this combined optimization problem as a stochastic control problem and derive an efficient policy for online ad allocation in settings with general joint distribution over placement quality and exchange bids. We prove asymptotic optimality of this policy in terms of any trade-off between quality of delivered reservation ads and revenue from the exchange, and provide a rigorous bound for its convergence rate to the optimal policy. We also give experimental results on data derived from real publisher inventory, showing that our policy can achieve any pareto-optimal point on the quality vs. revenue curve. Finally, we study a parametric training-based algorithm in which instead of learning the dual variables from a sample data (as is done in non-parametric training-based algorithms), we learn the parameters of the distribution and construct those dual variables from the learned parameter values. We compare parametric and non-parametric ways to estimate from data both analytically and experimentally in the special case without the ad exchange, and show that though both methods converge to the optimal policy as the sample size grows, our parametric method converges faster, and thus performs better on smaller samples.
Balseiro Santiago
Feldman Jon
Mirrokni Vahab
Muthukrishnan Siddharth
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