Stochastic Budget Optimization in Internet Advertising

Internet advertising is a sophisticated game in which the many advertisers "play" to optimize their return on investment. There are many "targets" for the advertisements, and in each "target" is a collection of games with a potentially different set of players are involved. We study the problem of how advertisers allocate their budget across these "targets". In particular, we focus on formulating their best response strategy as an optimization problem. Advertisers have a set of keywords ("targets") and some stochastic information about the future, namely a probability distribution over scenarios of cost vs click combinations. This summarizes the potential states of the world assuming tegies of other players are fixed. Then the best response can be abstracted as stochastic budget optimization problems to figure out how to spread a given budget across these keywords to maximize the expected number of clicks. We present the first known no...

• Type: Journal
• Year: 2010
• Where: CORR
• Authors: Bhaskar DasGupta, S. Muthukrishnan
• Keywords: CORR 2010, Education, Optimization Problems, Problems, Stochastic Budget Optimization