Display advertising is an important online advertising type where banneradvertisements (shortly ad) on websites are usually measured by how many timesthey are viewed by online users. There are two major channels to sell ad views.They can be auctioned off in real time or be directly sold through guaranteedcontracts in advance. The former is also known as real-time bidding (RTB), inwhich media buyers come to a common marketplace to compete for a single ad viewand this inventory will be allocated to a buyer in milliseconds by an auctionmodel. Unlike RTB, buying and selling guaranteed contracts are not usuallyprogrammatic but through private negotiations as advertisers would like tocustomise their requests and purchase ad views in bulk. In this paper, wepropose a simple model that facilitates the automation of direct sales. In ourmodel, a media seller puts future ad views on sale and receives buy requestssequentially over time until the future delivery period. The seller maintains ahidden yet dynamically changing reserve price in order to decide whether toaccept a buy request or not. The future supply and demand are assumed to bewell estimated and static, and the model's revenue management is usinginventory control theory where each computed reverse price is based on theupdated supply and demand, and the unsold future ad views will be auctioned offin RTB to the meet the unfulfilled demand. The model has several desirableproperties. First, it is not limited to the demand arrival assumption. Second,it will not affect the current equilibrium between RTB and direct sales asthere are no posted guaranteed prices. Third, the model uses the expectedrevenue from RTB as a lower bound for inventory control and we show that apublisher can receive expected total revenue greater than or equal to thosefrom only RTB if she uses the computed dynamic reserves prices for directsales.
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