A New Optimization Layer for Real-Time Bidding Advertising Campaigns
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While it is relatively easy to start an online advertising campaign, obtaining a high Key Performance Indicator (KPI) can be challenging. A large body of work on this subject has already been performed and platforms known as DSPs are available on the market that deal with such an optimization. From the advertiser's point of view, each DSP is a different black box, with its pros and cons, that needs to be configured. In order to take advantage of the pros of every DSP, advertisers are well-advised to use a combination of them when setting up their campaigns. In this paper, we propose an algorithm for advertisers to add an optimization layer on top of DSPs. The algorithm we introduce, called SKOTT, maximizes the chosen KPI by optimally configuring the DSPs and putting them in competition with each other. SKOTT is a highly specialized iterative algorithm loosely based on gradient descent that is made up of three independent sub-routines, each dealing with a different problem: partitioning the budget, setting the desired average bid, and preventing under-delivery. In particular, one of the novelties of our approach lies in our taking the perspective of the advertisers rather than the DSPs. Synthetic market data is used to evaluate the efficiency of SKOTT against other state-of-the-art approaches adapted from similar problems. The results illustrate the benefits of our proposals, which greatly outperforms the other methods.
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