Bypassing Performance Optimizers of Real Time Bidding Systems in Display Ad Valuation

2022 | Information Systems Research | Citations: 1

Authors: Christopher, Ranjit M.; Park, Sungho; Han, Sang Pil; Kim, Min-Kyu

Abstract: Demand-side platforms (DSPs) that purchase digital ad space using real-time bidd ... Expand

Abstract: Demand-side platforms (DSPs) that purchase digital ad space using real-time bidding (RTB) systems employ “black-box” performance optimizers to adjust bids at run time. Advertisers using field experiments to estimate the marginal value of display ads need to contend with the selective targeting of users by optimizers that adjust bids to target users with a greater propensity to respond favorably (i.e., click or conversion). In this paper, we propose an alternative approach for advertisers who choose to bypass their DSP’s performance optimizers for the purpose of assessing the value of their ads. We show that external frequency caps that set upper limits on the number of ad impressions outside the purview of bidding algorithms can serve as a suitable instrumental variable. Eliminating performance optimizers allows the advertiser to value ads without relying on the support services of the DSP with the added benefit of a broader customer reach and a markedly lower cost. As the focal advertiser disables performance optimizers, any overbidding or underbidding vis-à-vis competition that employs them results in a negative correlation between the numbers of ad impressions won and their underlying quality in real time. Using two large-scale randomized field experiments in different geographies (United States and Asia) and different devices (PC and mobile), we validate the proposed approach and report a positive effect of ad impression count after adjusting for net negative bias. Collapse

Topics: Tencent QQ marketing management online advertising electronic commerce mobile application

Methods: experiment experimental design instrumental variables estimation field experiment regression analysis method

The Welfare Impact of Targeted Advertising Technologies

2022 | Information Systems Research | Citations: 3

Authors: Marotta, Veronica; Wu, Yue; Zhang, Kaifu; Acquisti, Alessandro

Abstract: We analyze the welfare implications of consumer data sharing, and restrictions t ... Expand

Abstract: We analyze the welfare implications of consumer data sharing, and restrictions to that sharing, in the context of online targeted advertising. Targeting technologies offer firms the ability to reach desired audiences through intermediary platforms. The platforms run auctions in real time to display ads on internet sites, leveraging consumers’ personal information collected online to personalize the ads. The online advertising industry posits that targeted advertising benefits advertising firms (that is, merchants who want to target ads to the desired consumers), consumers who see ads for preferred products, and the intermediary platforms that match consumers with firms. However, the claims that targeted advertising benefits all players involved have not been fully vetted in the literature. We develop an analytical model to analyze the economic and welfare implications of targeting technologies for those three players under alternative consumer information regimes. The regimes differ in the type and amount of consumer data available to the intermediary and to the advertising firms, and reflect the presence or absence of technological or regulatory restrictions to personal information flows. We find evidence of incentive misalignment among the players, as the intermediary prefers to share only a subset of consumer information with firms, whereas advertising firms prefer having complete information about the consumers. As such, a strategic intermediary with the ability to control which information is shared during the auction can have an incentive to use only the information that maximizes its payoff, overlooking the interests of both advertising firms and consumers. The information regimes that maximize consumer welfare vastly differ depending on consumers’ heterogeneity along two dimensions: a horizontal dimension, capturing consumer’s heterogeneity in product preferences; and a vertical dimension, capturing consumers’ heterogeneity in purchase power. Consumers prefer none of their personal information to be used for targeting only in limited circumstances. Otherwise, consumers are either indifferent or prefer only specific types of information to be used for targeting. Collapse

Topics: advertising management IS economics consumer surplus privacy marketing management

Methods: archival research mathematical model theory development

Theories: auction theory

Welfare Implications in Intermediary Networks

2021 | Information Systems Research | Citations: 0

Authors: Nguyen, Thành; Kannan, Karthik

Abstract: We study the welfare implications of competing middlemen in a two-sided market, ... Expand

Abstract: We study the welfare implications of competing middlemen in a two-sided market, where goods are intermediated between providers and purchasers. In our model, each intermediary sets the quantities it intermediates, and the prices are a consequence of a Cournot competition. Our analysis shows that, unlike traditional markets, increasing competition is not always beneficial for market efficiency and that mergers can have an ambiguous effect on efficiency. We also analyze how the underlying network influences social welfare. We define a parameter called the intermediary capacity of the network and show how the price of anarchy depends on this parameter. These results suggest an intuitive and simple measure for the level of competitiveness in a networked market involving intermediaries. Collapse

Topics: IS economics economic surplus consumer surplus ride sharing platform network effect

Methods: survey literature study cross sectional research chi squared test

Off With Their Headers: Mechanism Choices in Online Display Advertising

2020 | International Conference on Information Systems | Citations: 0

Authors: Balocco, Francesco; Lu, Yixin; Li, Ting

Abstract: The online display advertising market is undergoing major transformations. In th ... Expand

Abstract: The online display advertising market is undergoing major transformations. In this paper, we study the drivers for publishers’ transition from the waterfall model to header bidding and the ad exchanges’ shift from the second-price to the first-price auction through analytical modeling. We show that adopting header bidding is profitable only when advertisers’ valuations are asymmetric. We also show that switching to the first-price sealed bid mechanism is a dominant strategy for Ad Exchanges when publishers adopt header bidding. Our paper contributes to the literature by reconciling different views around the underlying drivers behind the on-going mechanism switches and shedding new lights on the complex interplay of informational and strategic factors in the online display advertising market. Collapse

Topics: banner advertising decision making digital ad exchange online advertising marketing management

Methods: mathematical model design methodology

Theories: auction theory

Sustaining a Good Impression: Mechanisms for Selling Partitioned Impressions at Ad Exchanges

2020 | Information Systems Research | Citations: 0

Authors: Mehta, Sameer; Dawande, Milind; Janakiraman, Ganesh; Mookerjee, Vijay

Abstract: In the mobile advertising ecosystem, the role of ad exchanges to match advertise ... Expand

Abstract: In the mobile advertising ecosystem, the role of ad exchanges to match advertisers and publishers has grown significantly over the past few years. At a mobile ad exchange, impressions (i.e., opportunities to display ads) are sold to advertisers in real time through an auction mechanism. The traditional mechanism selects a single advertiser whose ad is displayed over the entire duration of an impression, that is, throughout the user’s visit. We argue that such a mechanism leads to an allocative inefficiency, as displaying only the winning ad throughout the lifetime of an impression precludes the exchange from exploiting the opportunity to obtain additional revenue from advertisers whose willingness to pay becomes higher during the lifetime of that impression. Our goal in this paper is to address this efficiency loss by offering mechanisms in which multiple ads can be displayed sequentially over the lifetime of the impression. We consider two plausible settings—one where each auction is individually rational for the advertisers and one where advertisers are better off relative to the traditional mechanism over the long run—and derive an optimal (i.e., revenue-maximizing for the ad exchange) mechanism for each setting. To efficiently compute the payment rule, the optimal mechanism for the former setting uses randomized payments. Under this mechanism, whereas the ad exchange always benefits relative to the traditional mechanism, the advertisers could either gain or lose—we demonstrate both these possibilities. The optimal mechanism for the latter setting is a “mutually beneficial” mechanism in that it guarantees a win–win for both the parties relative to the traditional mechanism, over the long run. Happily, for both the mechanisms, the allocation of ads and the payments from the advertisers are efficiently computable, thereby making them amenable to real-time bidding. Collapse

Topics: marketing management digital ad exchange mobile application IS economics economic surplus

Methods: descriptive statistic optimization model experiment hazard function

Making Snowflakes Like Stocks: Stretching, Bending, and Positioning to Make Financial Market Analogies Work in Online Advertising

2016 | Organization Science | Citations: 0

Authors: Glaser, Vern L.; Fiss, Peer C.; Kennedy, Mark Thomas

Abstract: Analogies to financial markets have proven powerful in establishing novel or pot ... Expand

Abstract: Analogies to financial markets have proven powerful in establishing novel or potentially controversial business concepts, even in contexts that deviate significantly from financial markets. This phenomenon challenges theory that suggests analogies work best when elements from a source and target domain map closely to each other. To develop a theory that explains how organizations make initially imperfect analogies “work,” we use a case study of online advertising exchanges, a market-inspired model for buying and selling online advertising space. We find that as organizations stretch an initially misfitting exchange analogy from financial markets to online advertising, they iteratively bend their activities in superficial, structural, and generative ways to match the analogy and position themselves for advantage in the new space being created. Whereas prior studies emphasize shared cognition about familiar domains as the reason why analogies work, our study offers a dynamic account in which stretching, bending, and positioning combine to not only establish the financial market analogy but also subtly change the understanding of markets. Collapse

Topics: marketing management advertising management online advertising blog banner advertising

Methods: qualitative interview theory development company material case study grounded theory

PREDICTING ONLINE USER BEHAVIOR BASED ON REAL-TIME ADVERTISING DATA

2016 | European Conference On Information Systems | Citations: 0

Authors: Stange, Martin; Funk, Burkhardt

Abstract: Generating economic value from big data is a challenge for many companies these ... Expand

Abstract: Generating economic value from big data is a challenge for many companies these days. On the Internet, a major source of big data is structured and unstructured data generated by users. Companies can use this data to better understand patterns of user behavior and to improve marketing decisions. In this paper, we focus on data generated in real-time advertising where billions of advertising slots are sold by auction. The auctions are triggered by user activity on websites that use this form of advertising to sell their advertising slots. During an auction, so-called bid requests are sent to advertisers who bid for the advertising slots. We develop a model that uses bid requests to predict whether a user will visit a certain website during his or her user journey. These predictions can be used by advertisers to derive user interests early in the sales funnel and, thus, to increase profits from branding campaigns. By iteratively applying a Bayesian multinomial logistic model to data from a case study, we show how to constantly improve the predictive accuracy of the model. We calculate the economic value of our model and show that it can be beneficial for advertisers in the context of cross-channel advertising. Collapse

Topics: website advertising management marketing management big data online advertising

Methods: case study machine learning Bayesian analysis literature study multinomial logistic regression

The Making of a Good Impression: Information Hiding in Ad Exchanges

2016 | Management Information Systems Quarterly | Citations: 3

Authors: Sun, Zhen; Dawande, Milind; Janakiraman, Ganesh; Mookerjee, Vijay

Abstract: The article discusses information revelation in relation to ad exchanges with se ... Expand

Abstract: The article discusses information revelation in relation to ad exchanges with second-price auction mechanisms. Topics include differences between one-call design and two-call design for auctions, the availability of information to bidders regarding valuations, and the the implications of an information revelation policy on stakeholders in the system. An online advertising marketplace is studied. Collapse

Topics: digital ad exchange marketing management economic surplus IS economics website

Methods: experiment optimization model simulation

Auto pricing Strategy for Real time bidding in advertising: A dynamic programming approach

2015 | International Conference on Information Systems | Citations: 0

Authors: Adikari, Shalinda; Dutta, Kaushik

Abstract: Unlike the traditional advertising practices, in the process of Real time biddin ... Expand

Abstract: Unlike the traditional advertising practices, in the process of Real time bidding (RTB), the impressions of a mobile application or a website are mapped to a particular advertiser through a real time auction, which triggers after an application is launched. As one of the key components of the RTB ecosystem, demand side platform (DSP) furnishes the advertisers a full pledge window to bid for available impressions. Due to fast growing market of mobile applications and websites, the selection of the most pertinent target audience to a particular advertiser, is not a simple human mediated process. Therefore, we propose an Auto Pricing Strategy (APS) approach to determine the applications to bid for and their respective bid prices from the advertisement agency perspective. We applied the APS on a real RTB bidding data and demonstrated how it outperforms the existing RTB approaches with a higher conversion rate for the same target spend. Collapse

Topics: mobile application Java advertising management price management mobile system

Methods: dynamic programming literature study computational algorithm optimization model mathematical model

The Welfare and Allocative Impact of Targeted Advertising

2015 | International Conference on Information Systems | Citations: 0

Authors: Marotta, Veronica; Zhang, Kaifu; Acquisti, Alessandro

Abstract: We investigate the welfare implications and the allocative effects of different ... Expand

Abstract: We investigate the welfare implications and the allocative effects of different consumer data-handling regimes in online targeted advertising. We develop a three-players model that includes firms, consumers, and an intermediary - the ad exchange – and analyze three scenarios that differ in the type of consumers' data available during the targeting: a case in which only the horizontal information (consumers' brand preferences) is available; a case in which only vertical information (consumers' purchasing power) is available; a case in which both pieces of information are available. We find that there exist conditions under which the intermediary obtains the highest proportion of benefits from targeting and, in general, the intermediary's incentives regarding the type of consumer information to be used for targeting are misaligned with the incentives of firms and/or consumers. Furthermore, consumers' surplus from targeting is higher when only specific types of personal information are made available during the targeting process. Collapse

Topics: marketing management digital ad exchange advertising management IS economics consumer surplus

Methods: simulation economic model mathematical model literature study archival research

Theories: auction theory