Dynamic revenue management for online display advertising

Abstract

In this paper, we propose a dynamic optimisation model to maximise a web publisher's online display advertising revenues. Our model dynamically selects which advertising requests to accept and dynamically delivers the promised advertising impressions to viewers so as to maximise revenue, accounting for uncertainty in advertising requests and website traffic. After characterising the structural properties of our model, we propose a Certainty Equivalent Control heuristic and then show with a real case study that our optimisation-based method outperforms common practices. These results highlight the importance of accounting for the opportunity cost of capacity allocation in advertisement contract negotiation for globally maximising online publishers’ revenues.

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Correspondence to Guillaume Roels.

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Roels, G., Fridgeirsdottir, K. Dynamic revenue management for online display advertising. J Revenue Pricing Manag 8, 452–466 (2009). https://doi.org/10.1057/rpm.2009.10

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Keywords

  • revenue management
  • online advertising
  • dynamic programming
  • linear programming