Targeted Advertising on the Web with Inventory Management

Companies that maintain Web sites can make considerable revenue by running advertisements, and they therefore compete to attract advertisers. The ability to deliver high click-through rates on a site can attract advertisers and, under an appropriate pricing model, can also increase revenue directly. Consequently, companies can benefit from delivery systems that display advertisements selectively to those visitors most likely to click though. To satisfy contractual obligations, however, these systems must simultaneously manage inventory. We developed a delivery system that maximizes click-through rate given inventory-management constraints in the form of advertisement quotas. The system uses predictive segments in conjunction with a linear program to perform the constrained optimization. Using a real Web site (msn.com), we demonstrated the efficacy of the system. We can generalize our system to find revenue-optimal advertisement schedules under a wide variety of pricing models.