Bid Optimization for Internet Graphical Ad Auction Systems via Special Ordered Sets英文文献资料.docVIP

iBusiness, 2010, 2, 249-254 doi:10.4236/ib.2010.23032 Published Online September 2010 (http://www.SciRP.org/journal/ib) Bid Optimization for Internet Graphical Ad Auction Systems via Special Ordered Sets Ralphe Wiggins, John A. Tomlin Yahoo!, Inc., 4301 Great America Pkwy, Santa Clara, USA. Email: ralphe@, tomlin@ Received November 26 , 2009; revised April 3 , 2010; accepted June 10 , 2010. th rd th ABSTRACT This paper describes an optimization model for setting bid levels for certain types of advertisements on web pages. This model is non-convex, but we are able to obtain optimal or near-optimal solutions rapidly using branch and cut open- source software. The financial benefits obtained using the prototype system have been substantial. Keywords: Optimization, Advertising, Electronic Business 1. Introduction how to split the Class 2 ad inventory between “house businesses” and paying clients. House businesses (email, personals, etc.) contribute to gross income in 3 ways: 1) Businesses that sell a product or service (i.e., Small Business, Personals) contribute directly to income. The competition with paying clients for inventory resources should be based on net income minus life time revenue reduced by an estimate of the cost of the business. 2) Businesses that enhance traffic by encouraging people to go to other parts of the network. To the extent that the cost of the clicked-on ads is less than the income on the target property, the net income is the difference between these two amounts and such ads can compete in the optimization on that basis. In a dynamic environment, both the cost and income can be tracked to take advantage of current ad effectiveness and user behavior. 3) Finally, there are Yahoo! businesses that enhance income simply by increasing the appeal of visiting the Yah