<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Today's Internet marketing ecosystems are very complex, with many competing players, transactions concluded within milliseconds, and hundreds of different parameters to be analyzed in the decision-making process. In addition, both sellers and buyers operate under uncertainty, without full information about auction results, purchasing preferences, and strategies of their competitors or suppliers. As a result, most market participants strive to optimize their trading strategies using advanced machine learning algorithms. In this publication, we propose a new approach to determining reserve-price strategies for publishers, focusing not only on the profits from individual ad impressions, but also on maximum coverage of advertising space. This strategy combines the heuristics developed by experienced RTB consultants with machine learning forecasting algorithms like ARIMA, SARIMA, Exponential Smoothing, and Facebook Prophet. The paper analyses the effectiveness of these algorithms, recommends the best one, and presents its implementation in real environment. As such, its results may form a basis for a competitive advantage for publishers on very demanding online advertising markets.</p></abstract>

Today's Internet marketing ecosystems are very complex, with many competing players, transactions concluded within milliseconds, and hundreds of different parameters to be analyzed in the decision-making process. In addition, both sellers and buyers operate under uncertainty, without full information about auction results, purchasing preferences, and strategies of their competitors or suppliers. As a result, most market participants strive to optimize their trading strategies using advanced machine learning algorithms. In this publication, we propose a new approach to determining reserve-price strategies for publishers, focusing not only on the profits from individual ad impressions, but also on maximum coverage of advertising space. This strategy combines the heuristics developed by experienced RTB consultants with machine learning forecasting algorithms like ARIMA, SARIMA, Exponential Smoothing, and Facebook Prophet. The paper analyses the effectiveness of these algorithms, recommends the best one, and presents its implementation in real environment. As such, its results may form a basis for a competitive advantage for publishers on very demanding online advertising markets.

The Reserve Price Optimization for Publishers on Real-Time Bidding on-Line Marketplaces with Time-Series Forecasting

Foundations of Management

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Today's Internet marketing ecosystems are very complex, with many competing players, transactions concluded within milliseconds, and hundreds of different...

Model	RMSE
Baseline (persistance)	11.20
SARIMA	8.48
ETS	8.37
Facebook Prophet (Medium and High Coverage)	6.71

The Reserve Price Optimization for Publishers on Real-Time Bidding on-Line Marketplaces with Time-Series Forecasting

Published Online: Nov 07, 2020

Page range: 167 - 180

DOI: https://doi.org/10.2478/fman-2020-0013

Keywords
online marketing, real-time bidding, reserve price optimization, machine learning, forecasting

© 2020 Andrzej Wodecki, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Figure 1

Figure 2

Figure 3

Figure 4

Evaluation of time series forecasting models (Source: Own elaboration)

The Reserve Price Optimization for Publishers on Real-Time Bidding on-Line Marketplaces with Time-Series Forecasting

Published Online: Nov 07, 2020

Page range: 167 - 180

DOI: https://doi.org/10.2478/fman-2020-0013

Keywordsonline marketing, real-time bidding, reserve price optimization, machine learning, forecasting

© 2020 Andrzej Wodecki, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Figure 1

Figure 2

Figure 3

Figure 4

Evaluation of time series forecasting models (Source: Own elaboration)

Keywords
online marketing, real-time bidding, reserve price optimization, machine learning, forecasting