RTB: Lift-based
Notes.
Impression: is created at publishers website when a user visits a webpage.
SSP: Supply side platforms serve publishers by registering their impressions from multiple ad networks and accepting bids and placing ads automatically.
DSP: Demand side pltforms serve advertisers by bidding for their campaigns in multiple ad networks automatically.
ADX: Ad exchanges put multiple ad networks together.
DMP: Data management platforms serve SSP, DSP, and ADX by providing real-time user historical data.
The number of clicks and conversions are uaually used to assess online ads.
DSPs charge advertisers the ad costs using CPC (cost-per-click), CPA (cost-per-action), and CPM (cost-per-impression).
Performance-based bidding strategy is typically used to optimize above metrics. However, this strategy ignores the situations that a user will convert even without an ad. In addition, it does not consider the fact that the trianing data is heavily biased.
Lift-based bidding strategy predicts the lift, instead of performance, of showing an ad to a specific user. This trategy optimizes the advertisers profit by predicting the bid price for each impression. Technically, it optimizes the generalization error.
Lift is calculated as the precent in each metric for users who received an experiment campain versus a control group.
RTB behavioural targeting steps:
create an impression at publishers website when a user visits a webpage.
While loading the webpage, send an ad request to ad exchange via SSP.
Ask DSPs to bids from advertisers.
DSPs query 3rd party user data.
If yes to bid, generate a bid and submit it.
Ad exchanges select a bid winner, then SSP select that winner.
Send winner notice to advertiser.
Display winner ad to the user.
Collect users behavior, such as clicks and conversions.
HTTP cookies:
When a user visits an website, a tag from a third-party tracker can be embedded via pixel 1x1 tags on the website. This tracker records the cookies ID and syncs with the website.
Cookies are only applicable to browsers. They can be easily deleted by clearning the browsers cache. Users can disable cookies completely.
Bidding:
CPM: cost-per-thousand impressions is one way to bid where the ad is paid by per one thousand impressions.
CPC: cost-per-click is another way to bid where the ad is paid by per click.
The advertisers are notified of the winning price only if they have won the bidding. Therefore, each advertiser only has part of the whole market data.
A bid request consists of features such as size, color, etc. Advertisers predict the value of that ad by assessing the likelihood of user conversion and the value of that conversion. CPMs are typically used than CPCs.
Bidding strategies:
A bidding function is designed using auction volume, campaign budget, and campaign KPIs (such as the number of clicks or conversions, and advertising revenue).
References:
Moriwaki D, Hayakawa Y, Munemasa I, Saito Y, Matsui A (2020): Unbiased Lift-based Bidding system. CoRR, abs/2007.04002, arXiv, https://arxiv.org/abs/2007.04002
Wang J, Zhang W, Yuan Sh (2016): Display Advertising with Real-Time Bidding (RTB) and Behavioural Targeting. ArXiv, 1610.03013, http://arxiv.org/abs/1610.03013