Operations Research, Vol.65, No. 4, July-August 2017
Display ads generate about US$25 billion a year through sales of “impressions” – a pair of eyeballs on an online advertisement that can be a banner, video or non-text-based promotion. But these impressions are unpredictable, change over time and cannot be stored. So how can publishers maximise their profits? Ying-Ju Chen investigates the issue and proposes a framework for dealing with all these factors.
Display ads are typically sold through two markets – a guaranteed market in which the publisher commits to delivering a pre-specified number of impressions within a fixed time frame, and a spot market in which the publisher runs an auction to allocate display ads in every period. Yahoo! And MSN.com are examples of web page owners who take the guaranteed approach. Right-Media Exchange is an example of a spot market (it holds nine billion auctions a day).
Typically, the framework for these activities has been the publisher’s website and the placement of ads within that site. However, recently the focus has turned to page-based allocation of ads, which gives rise to many more impression possibilities depending on gender, location, time of day and many other factors. Advertisers want to ensure their ads reach their targeted audience. For instance, they do not want their cars appearing on websites for blind senior citizens.