Dynamic Creative Optimization in Online Display Advertising

33 Pages Posted: 10 Jun 2021

See all articles by Lennart Baardman

Lennart Baardman

University of Michigan, Stephen M. Ross School of Business

Elaheh Fata

Queen's University - Smith School of Business

Abhishek Pani

Independent

Georgia Perakis

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: June 4, 2021

Abstract

The large growth of online advertising and the associated growth in personalized data allows advertisers to customize their advertisements for specific customers. In particular, advertisers can customize the product that is displayed in the ad as well as the creative look of the ad. We focus on the dynamic creative optimization (DCO) problem, wherein the objective is to determine which product to show and creative to use, while constrained by business rules on advertising fatigue, advertisement retargeting, and user diversity. We study the DCO problem from an offline and an online perspective, as the number of user arrivals can be estimated but is uncertain in practice. We show that the offline DCO problem can be solved optimally using a network flow reformulation, and we develop an asymptotically optimal algorithm for the online DCO problem. Finally, in computational experiments, we show that our algorithm performs strongly on data from a simulation calibrated by practice.

Keywords: Online Advertising, Online Matching, Approximation Algorithms

Suggested Citation

Baardman, Lennart and Fata, Elaheh and Pani, Abhishek and Perakis, Georgia, Dynamic Creative Optimization in Online Display Advertising (June 4, 2021). Available at SSRN: https://ssrn.com/abstract=3863663 or http://dx.doi.org/10.2139/ssrn.3863663

Lennart Baardman (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Elaheh Fata

Queen's University - Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Abhishek Pani

Independent

Georgia Perakis

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-565
Cambridge, MA 02142
United States

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