Chapter 4 - A Budget Optimization Framework for Search Advertisements

Abstract

Budget optimization is one of primary decision-making issues faced by advertisers in sponsored search auctions. A quality budget optimization strategy can significantly improve the effectiveness of search advertising campaigns, thus helping advertisers to succeed in the fierce competition of online marketing. This chapter investigates budget optimization problems in search advertisements, and proposes a novel hierarchical budget optimization framework (BOF), with consideration of the entire lifecycle of advertising campaigns. Then we formulate our BOF framework, do some mathematical analysis of some desirable properties, and present an effective solution algorithm. Also we establish a simple but illustrative instantiation of our BOF framework which can help advertisers to allocate and adjust the budget of search advertising campaigns. Our BOF framework provides an open testbed environment for various strategies of budget allocation and adjustment across search advertising markets. With field reports and logs from real-world search advertising campaigns, we design some experiments to evaluate the effectiveness of our BOF framework and instantiated strategies. Experimental results are quite promising, where our BOF framework and instantiated strategies perform better than two baseline budget strategies commonly used in practical advertising campaigns.