online advertisements and the adwords problem

Online Advertisement and the AdWords Problem

PRESENTER

RAJESH PIRYANI

Traditional AdvertisingAt the beginning: Traditional Ads

Posters, Magazines, Newspapers,Billboards.

What is being Sold:

Pay-per-Impression: Price depends onhow many people your ad is shown to(whether or not they look at it)

Advertising on the WebOnline Ads:

Banner Ads, Sponsored Search Ads, Pay-per-Sale ads.

Targeting:

Show to particular set of viewers.

Measurement:

Accurate Metrics: Clicks, Tracked Purchases.

What is being Sold:

Pay-per-Click, Pay-per-Action, Pay-per-Impression

Banner AdsBanner ads (1995-2001)

Popular websites charged X$ for every 1,000 “impressions” of the ad

Called “CPM” rate (Cost per thousand impressions)

Low click-through rates

Low ROI for advertisers

Some Statistics

Adwords is Advertiser

AdSense is for Publisher

Ads Format

Textual AdsWeb Advertising covers large amount of internet environment.

Internet advertiser spend 17 billion dollars in US on advertising, with 20%growth rate.

Textual ads covers huge portion of this market.

1. Sponsored Search or paid search advertising

2. Contextual advertising or context match

What is AdWords

Advertising system in which advertisers bid on certain keywords in order for their clickable

ads to appear in Google's search results

9

Search Query: ‘flowers’

Google Search Results

AdWords Ads

Understanding Adwords TechnicalitiesKeywords:

Ads are continuously matched to internet users interest based on your keywords

Use keywords match types to your advantage

Broad Match

Phrase Match

Exact Match

Negative Keywords

URL:

Two types of URL are used in an Adwords namely

Display URL

Actual URL

Broad MatchKeywords: buy flowersQueries: • buy flowers • buy red flowers• flowers buy• New York buy flowers

Phrase MatchKeywords: “buy flowers”Queries: Where can I buy flowers buy flowers in New Delhi buy red flowers (extra word) flowers buy (the words are

reversed)

Exact MatchKeywords: [buy flowers]Queries: buy flowers Buy flowers (Capitalization

doesn’t matter)

Negative MatchKeywords: -cheapQueries: buy cheap flowers cheap flowers in New York

Performance based advertisingIntroduced by Overture around 2000

Advertisers bid on search keywords

When some one searches for that keywords, the highest bidder’s ad is shown

Advertisers is charged only if the ad is clicked on

Similar model adopted by Google with some changes around 2002

Called adwords

Adwords Problem DefinitionInput

Advertisers Bid Set for each search query

CTR (Click through Rate) is provided for each pair of query-advertiser.

The budget of each advertiser for time period (it can be month, yearor depends).

Limit on the amount of ads to be illustrated for each search query.

𝑪𝑻𝑹 =𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒄𝒍𝒊𝒄𝒌𝒔 𝒐𝒏 𝒂𝒅𝒔

𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒕𝒊𝒎𝒆𝒔 𝒕𝒉𝒆 𝒂𝒅 𝒊𝒔 𝒔𝒉𝒐𝒘𝒏

Adwords Problem DefinitionResponse for apiece query with advertisers set such that:

The resultant set of ads should not be larger than the provided limit.

Every advertiser has to bid on the query.

For each click on the ads, every advertiser has sufficient budget to pay for it.

𝑹𝒆𝒗𝒆𝒏𝒖𝒆 = 𝑏𝑖𝑑 ∗ 𝐶𝑇𝑅

𝑪𝒐𝒎𝒑𝒆𝒕𝒊𝒕𝒊𝒗𝒆 𝑹𝒂𝒕𝒊𝒐 =minimum total revenue of algorithm for any sequence

𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑜𝑓 𝑜𝑝𝑡𝑖𝑚𝑢𝑚 𝑜𝑓𝑓𝑙𝑖𝑛𝑒 𝑎𝑙𝑔𝑜𝑟𝑖𝑡ℎ𝑚 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒 𝑠𝑒𝑞𝑢𝑒𝑛𝑐𝑒

The main objective: Maximize the search engine revenue

Expected Revenue

Advertiser Bid CTR Expected Revenue=Bid*CTR

A $1.00 1% 1 Cent

B $0.75 2% 1.5 Cent

C $0.50 2.5% 1.125 Cent

The Adwords Innovation

Advertiser Bid CTR Expected Revenue=Bid*CTR

B $0.75 2% 1.5 Cent

C $0.50 2.5% 1.125 Cent

A $1.00 1% 1 Cent

Instead of sorting advertisers by bid, sort by expected revenue!

• CTR of ad is unknown

• Advertisers have limited budgets and bid on multiple ads (Balance Algo.)

Greedy AlgorithmSimplified Environment

There is 1 ad shown for each query

All advertisers have same budget B

All ads are equally likely to be clicked

Value of each ads is the same (=1)

Greedy Algorithm

For a query, select any advertiser who value is 1 for that query.

Competitive Ratio=½.

Worst Scenario for Greedy AlgorithmTwo Advertiser A and B

A bids on query x, B bids for both query x and y

Both have budget $4

Query Stream: xxxx yyyy

Worst case greedy choice: BBBB _ _ _ _

Optimal: AAAA BBBB

Competitive Ratio =1/2.

This is the worst case!

Balance AlgorithmThis algorithm proposed by Mehta, Saberi, Vazirani, and Vazirani

For each query, to select the advertiser with the largest unspent budget

Breaks ties arbitrarily

ExampleTwo Advertiser A and B

A bids on query x, B bids for bothquery x and y

Both have budget $4

Query Stream: xxxx yyyy

Balance Choice : ABABBB _ _

Optimal: AAAA BBBB

Competitive Ratio =3/4.

For balance with 2 advertisers

(_)

A B

4 4

q(x) A

A B

3 4

q(xx) B

A B

3 3

q(xxx) A

A B

2 3

q(xxxx) B

A B

2 2

q(xxxxy) B (NV: A)

A B

2 1

Implementation

DatasetOpen Advertising dataset

Keywords List

Bidding List: US and UK Market

Bidding dataset1: 177 US Market, 179 UK Market

Bidding dataset2: 244 US Market, 244 UK Market

Bidding dataset3:

Web Page results associated with keywords

Block Diagram

Keywords List Bidding Info

Webpages

System CTR Calculation

Results

Query

Implementation on Open Advertising Dataset

Implementation on Open Advertising Dataset

ReferenceBook:

Mining Massive Dataset By Jure Leskovec, Anand Rajaraman, Jeff Ullman

Papers:

A. Broder, M. Fontoura, V. Josifovski, and L. Riedel, “A semantic approach tocontextual advertising,” Proceedings of the 30th annual international ACMSIGIR conference on Research and development in information retrieval - SIGIR’07, 2007.

T.-K. Fan and C.-H. Chang, “Blogger-Centric Contextual Advertising,” ExpertSystems with Applications, vol. 38, no. 3, pp. 1777–1788, Mar. 2011.

Thank you