Real-Time Optimization Of Web Publisher RTB Revenues

TL;DR

This paper presents a real-time, adaptive engine for optimizing web publisher revenues in second-price auctions, effectively handling non-stationary environments and censored bid data to significantly increase revenue.

Contribution

It introduces a novel, fast, non-parametric, online revenue optimization method for RTB auctions that adapts to user and placement dependencies in real-world settings.

Findings

Engine predicts optimal reserve prices in ~1 ms

Significant revenue increases achieved in deployment

Handles non-stationary, censored bid data effectively

Abstract

This paper describes an engine to optimize web publisher revenues from second-price auctions. These auctions are widely used to sell online ad spaces in a mechanism called real-time bidding (RTB). Optimization within these auctions is crucial for web publishers, because setting appropriate reserve prices can significantly increase revenue. We consider a practical real-world setting where the only available information before an auction occurs consists of a user identifier and an ad placement identifier. The real-world challenges we had to tackle consist mainly of tracking the dependencies on both the user and placement in an highly non-stationary environment and of dealing with censored bid observations. These challenges led us to make the following design choices: (i) we adopted a relatively simple non-parametric regression model of auction revenue based on an incremental time-weighted matrix factorization which implicitly builds adaptive users' and placements' profiles; (ii) we jointly used a non-parametric model to estimate the first and second bids' distribution when they are censored, based on an on-line extension of the Aalen's Additive model. Our engine is a component of a deployed system handling hundreds of web publishers across the world, serving billions of ads a day to hundreds of millions of visitors. The engine is able to predict, for each auction, an optimal reserve price in approximately one millisecond and yields a significant revenue increase for the web publishers.