Multichannel Auction Strategies in Online Advertising With a Profit Model

Jianxia Liu ,Gang Ma,Yangyang Jiao

doi:10.1109/access.2020.2991989

Jianxia Liu , Gang Ma + Show 1 more

Open Access

https://doi.org/10.1109/access.2020.2991989

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Abstract

In the online advertising market that has increasingly emerged with the Internet's rapid development, supply side platforms (SSP) use multichannel auctions to sell demand side platform (DSP) advertisements. To explore which channel is dominant, we analyze three channels including direct bidding, bidding with costly information and proxy bidding. We develop an analytical model for studying the SSP's channel decisions and expected profit that will be generated in the context of such multichannel auctions. First, we construct the SSP profit models for these different channels. Then, comparing the profits, we analyze the formulation of strategies for these different situations. Importantly, for the three channels, we study how the probability that bidders will attach a higher value to advertisements influences the multichannel strategy of the SSP. The results show the following: (1) each channel has a market share; (2) it is better for SSPs to use the costly bidding channel if the probability that the bidders are higher value bidders is low or very high; and (3) the SSPs should consider the use of proxy bidding when the reserve price is high and the probability of having higher value bidders is not high.

Highlights

With the development of the Internet, increasingly more deals are made through the Internet [1]
We examine the effect that various values of λc and λf have on the expected profits of channel y and channel z
These models should be helpful for supply side platform (SSP) in their development of strategies for different reserved prices and channels, which is beneficial to make strategies of SSPs, especially multi channels

Summary

INTRODUCTION

With the development of the Internet, increasingly more deals are made through the Internet [1]. Liu et al.: Multichannel Auction Strategies in Online Advertising With a Profit Model functions for predicted click-through rates in auctions for online advertising, which could improve economic efficiency They focused on optimization and ignored the profits of different channels. The advertising process is accomplished through the exogenous bidding (direct bidding) channel and provides a convenient way for both auctioneer and bidders to trade online advertising As this method is time consuming, it is on the decline. The company ‘‘SunTeng technology’’ provides whole process marketing technology solutions and is one of the largest DSP platforms in China It has developed a global business in which bidders can consult with the company to acquire accurate and valuable information about online advertising before bidding to enhance the efficiency of purchase.

PROBLEM DESCRIPTION

METHODS AND MODELS

SIMPLIFICATION OF MODELS

OPTIMAL STRATEGY FOR SSP IN DIFFERENT

DISCUSSION OF PARAMETERS FOR DETERMINING THE OPTIMAL STRATEGY

CONCLUSION