Combining Powers of Two Predictors in Optimizing Real-Time Bidding Strategy under Constrained Budget

We address the bidding strategy design problem faced by a Demand-Side Platform (DSP) in Real-Time Bidding (RTB) advertising. A RTB campaign consists of various parameters and usually a predefined budget. Under the budget constraint of a campaign, designing an optimal strategy for bidding on each impression to acquire as many clicks as possible is a main job of a DSP. State-of-the-art bidding algorithms rely on a single predictor, namely the clickthrough rate (CTR) predictor, to calculate the bidding value for each impression. This provides reasonable performance if the predictor has appropriate accuracy in predicting the probability of user clicking. However when the predictor gives only moderate accuracy, classical algorithms fail to capture optimal results.

We improve the situation by accomplishing an additional winning price predictor in the bidding process. In this paper, a method combining powers of two prediction models is proposed, and experiments with real world RTB datasets from benchmarking the new algorithm with a classic CTR-only method are presented. The proposed algorithm performs better with regard to both number of clicks achieved and effective cost per click in many different settings of budget constraints.