Bid Optimization for Internet Graphical Ad Auction Systems via Special Ordered Sets
Ralphe Wiggins, John A. Tomlin

TL;DR
This paper presents a non-convex bid optimization model for web page advertisements, achieving near-optimal solutions efficiently and demonstrating significant financial benefits with a prototype system.
Contribution
It introduces a novel bid optimization model using special ordered sets and demonstrates effective solution methods for non-convex problems.
Findings
Achieved substantial financial gains with the prototype system.
Successfully obtained optimal or near-optimal solutions rapidly.
Demonstrated the practical effectiveness of the model in real-world settings.
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.
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Taxonomy
TopicsConsumer Market Behavior and Pricing · Auction Theory and Applications · Digital Platforms and Economics
