Chitika – Real Time Bidding
Chitika, an advertising company similar to Google Adsense, is also a leader in this decade for PPI, PPC, and PPV advertising. What’s interesting about Chitika is its use of Real Time Bidding, which is quite different from the types of bids we learned in class. Google allows the Real Time Bidding option as well.
Real Time Bidding works by buying and selling an ad by the view, otherwise known as impression. The advertisers bid on an impression and if they win, the ad is shown on the publisher’s site. Once a user visits a publisher website, relevant information about that user is sent to the publisher server (search history, location, page being loaded, etc.) The server finds a group of advertisers in real time who would like their ad shown to the user based off the relevant information. The advertiser in that group with the highest bid gets his or her ad shown to the user (an impression). All of this occurs within hundreds of milliseconds, so it finishes before the page fully loads to the user.
The dominant strategy for the winner is to gradually reduce his or her bid price BUT increase it when the auction is lost. The publisher however should keep the reserve price below the winning bid, while trying to approach the winning bid gradually. If the reserve price is too high, it should be drastically reduced to make sure it will be below the winning bid. The reserve price ends up being equal to the second highest bid. Once there, the publisher does not need to lower any more. The winner will not lower the bid otherwise he or she would lose the auction giving 0 payoff.
Real Time Bidding is preferred because you have more control over who you’re targeting. Rather than purchasing impressions in bundles of 1000s, you pay per impression targeted to specific users determined from relevant information about them. The problem is when RTB is used on mobile technologies. Obtaining information about a user such as browser history & cookie data via mobile is far more difficult. Also, mobile RTB lacks standards in the industry, unlike desktop browsers. However, more work is being done in Real Time Bidding, and the day where it’s a common reality in mobile phones is nearing.
Source: http://yuan-shuai.info/paper/KDD-2014-empirical-study-reserve-price.pdf Gives an in depth introduction to Real Time Bidding, providing the necessary mathematical formulas (similar to the Advanced Sections in the Networks chapters).
Source: http://chitika.com/rtb A light summary of what Chitika uses for matching ads with publishers (the RTB). Shows us that RTB is used by a top advertising company even today.