Bypassing Performance Optimizers of Real Time Bidding Systems in Display Ad Valuation

Information Systems Research Forthcoming

28 Pages Posted: 4 Mar 2022

See all articles by Ranjit M Christopher

Ranjit M Christopher

University of Missouri Kansas City

Sungho Park

Arizona State University (ASU) - W.P. Carey School of Business

Sang Pil Han

Arizona State University, W.P.Carey School of Business

Min-Kyu Kim

Arizona State University (ASU), W.P. Carey School of Business, Students

Abstract

Demand-side platforms (DSP) that purchase digital ad space using real-time bidding (RTB) systems employ “black-box” performance optimizers to adjust bids at run-time. Advertisers using field experiments to estimate the marginal value of display ads need to contend with the selective targeting of users by optimizers that adjust bids to target users with a greater propensity to respond favorably (e.g., click, conversions). In this paper, we propose an alternative approach for advertisers who choose to bypass their DSP’s performance optimizers for the purpose of assessing the value of their ads. We show that external frequency-caps that set upper limits on the number of ad impressions outside the purview of bidding algorithms can serve as a suitable instrumental variable. Eliminating performance optimizers allows the advertiser to value ads without relying on the support services of the DSP with the added benefit of a broader customer reach and a markedly lower cost. As the focal advertiser disables performance optimizers, any overbidding or underbidding vis-à-vis competition that employs them results in a negative correlation between the numbers of ad impressions won and their underlying quality at real-time. Using two large-scale randomized field experiments in different geographies (US and Asia) and different devices (PC and mobile), we validate the proposed approach and report a positive effect of ad impression count after adjusting for net-negative bias.

Keywords: Digital Display Advertisement, Advertising Effectiveness, Real-time Bidding, Programmatic Advertising, Field Experiment, Frequency Caps

Suggested Citation

Christopher, Ranjit M and Park, Sungho and Han, Sang Pil and Kim, Min-Kyu, Bypassing Performance Optimizers of Real Time Bidding Systems in Display Ad Valuation. Information Systems Research Forthcoming, Available at SSRN: https://ssrn.com/abstract=4010242

Ranjit M Christopher

University of Missouri Kansas City ( email )

Sungho Park

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Marketing Department
PO Box 874106
Tempe, AZ 85287-4106
United States

Sang Pil Han (Contact Author)

Arizona State University, W.P.Carey School of Business ( email )

Tempe, AZ 85287-3706
United States
480-965-8603 (Phone)

HOME PAGE: http://https://apps.wpcarey.asu.edu/directory/people/profile.cfm?person=2255149

Min-Kyu Kim

Arizona State University (ASU), W.P. Carey School of Business, Students ( email )

Tempe, AZ 85287-3706
United States

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