Optimal dynamic multi-keyword bidding policy of an advertiser in search-based advertising

Sponsored search advertisement allows advertisers to target their messages to appropriate customer segments at low costs. While search engines are interested in auction mechanisms that boost their revenues, advertisers seek optimal bidding strategies to increase their net sale revenues for multiple...

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Published in:Mathematical methods of operations research (Heidelberg, Germany) Vol. 97; no. 1; pp. 25 - 56
Main Authors: Dayanik, Savas, Sezer, Semih O.
Format: Journal Article
Language:English
Published: Berlin/Heidelberg Springer Berlin Heidelberg 01-02-2023
Springer Nature B.V
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Abstract Sponsored search advertisement allows advertisers to target their messages to appropriate customer segments at low costs. While search engines are interested in auction mechanisms that boost their revenues, advertisers seek optimal bidding strategies to increase their net sale revenues for multiple keywords under strict daily budget constraints in an environment where keyword query arrivals, competitor bid amounts, and user purchases are random. We focus on the advertiser’s question and formulate her optimal intraday dynamic multi-keyword bidding problem as a continuous-time stochastic optimization problem. We solve the problem, characterize an optimal policy, and bring a numerical algorithm for implementation. We also illustrate our optimal bidding policy and its benefits over heuristic solutions on numerical examples.
AbstractList Sponsored search advertisement allows advertisers to target their messages to appropriate customer segments at low costs. While search engines are interested in auction mechanisms that boost their revenues, advertisers seek optimal bidding strategies to increase their net sale revenues for multiple keywords under strict daily budget constraints in an environment where keyword query arrivals, competitor bid amounts, and user purchases are random. We focus on the advertiser’s question and formulate her optimal intraday dynamic multi-keyword bidding problem as a continuous-time stochastic optimization problem. We solve the problem, characterize an optimal policy, and bring a numerical algorithm for implementation. We also illustrate our optimal bidding policy and its benefits over heuristic solutions on numerical examples.
Author Sezer, Semih O.
Dayanik, Savas
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  givenname: Semih O.
  orcidid: 0000-0003-4215-7703
  surname: Sezer
  fullname: Sezer, Semih O.
  email: sezer@sabanciuniv.edu
  organization: Faculty of Engineering and Natural Sciences, Sabancı University
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crossref_primary_10_1016_j_jretconser_2024_103880
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Copyright_xml – notice: The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2022. Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
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Issue 1
Keywords Sponsored search advertising
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Snippet Sponsored search advertisement allows advertisers to target their messages to appropriate customer segments at low costs. While search engines are interested...
SourceID proquest
crossref
springer
SourceType Aggregation Database
Publisher
StartPage 25
SubjectTerms Advertisers
Advertising
Algorithms
Auctions
Bids
Budgets
Business and Management
Calculus of Variations and Optimal Control; Optimization
Competition
Dynamic programming
Mathematics
Mathematics and Statistics
Numerical analysis
Operations research
Operations Research/Decision Theory
Optimization
Original Article
Revenue
Search engines
Title Optimal dynamic multi-keyword bidding policy of an advertiser in search-based advertising
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https://www.proquest.com/docview/2773474140
Volume 97
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