Bid Optimizing and Inventory Scoring in Targeted Online Advertising

Billions of online display advertising spots are purchased on a daily basis through real time bidding exchanges (RTBs).  Advertising companies bid for these spots on behalf of a company or brand in order to purchase these spots to display banner advertisements.  These bidding decisions must be made in fractions of a second after the potential purchaser is informed of what location (Internet site) has a spot available and who would see the advertisement.  The entire transaction must be completed in near real-time to avoid delays loading the page and maintain a good users experience.  This paper presents a bid-optimization approach that is implemented in production at Media6Degrees for bidding on these advertising opportunities at an appropriate price.  The approach combines several supervised learning algorithms, as well as second price auction theory, to determine the correct price to ensure that the right message is delivered to the right person, at the right time.