2012 JointOptimizationofBidandBudget

(Zhang et al., 2012) ⇒ Weinan Zhang, Ying Zhang, Bin Gao, Yong Yu, Xiaojie Yuan, and Tie-Yan Liu. (2012). “Joint Optimization of Bid and Budget Allocation in Sponsored Search.” In: Proceedings of the 18th ACM SIGKDD International Conference on Knowledge Discovery and Data Mining (KDD-2012). ISBN:978-1-4503-1462-6 doi:10.1145/2339530.2339716

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Author Keywords

Bid optimization; budget allocation; on-line information services; sponsored search

Abstract

This paper is concerned with the joint allocation of bid price and campaign budget in sponsored search. In this application, an advertiser can create a number of campaigns and set a budget for each of them. In a campaign, he / she can further create several ad groups with bid keywords and bid prices. Data analysis shows that many advertisers are dealing with a very large number of campaigns, bid keywords, and bid prices at the same time, which poses a great challenge to the optimality of their campaign management. As a result, the budgets of some campaigns might be too low to achieve the desired performance goals while those of some other campaigns might be wasted; the bid prices for some keywords may be too low to win competitive auctions while those of some other keywords may be unnecessarily high. In this paper, we propose a novel algorithm to automatically address this issue. In particular, we model the problem as a constrained optimization problem, which maximizes the expected advertiser revenue subject to the constraints of the total budget of the advertiser and the ranges of bid price change. By solving this optimization problem, we can obtain an optimal budget allocation plan as well as an optimal bid price setting. Our simulation results based on the sponsored search log of a commercial search engine have shown that by employing the proposed method, we can effectively improve the performances of the advertisers while at the same time we also see an increase in the revenue of the search engine. In addition, the results indicate that this method is robust to the second-order effects caused by the bid fluctuations from other advertisers.

References

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	Author	volume	Date Value	title	type	journal	titleUrl	doi	note	year
2012 JointOptimizationofBidandBudget	Yong Yu Bin Gao Tie-Yan Liu Weinan Zhang Ying Zhang Xiaojie Yuan			Joint Optimization of Bid and Budget Allocation in Sponsored Search				10.1145/2339530.2339716		2012