WebMining

Lecture13:Introductionto
ComputationalAdvertising(Part1)
ManishGupta
26th Sep2014
Slidesborrowed(andmodified)from
http://pierre.senellart.com/enseignement/20092010/inf396/4Recommandation/CompAdv.pdf
http://www.stanford.edu/class/msande239/
1

RecapofLecture12:AnalysisofMicroblogs
(Part2):LocationPrediction
LocationPredictionusingTweetContent
LocationPredictionusingSocialTies
ApplicationsofLocationPrediction

TodaysAgenda

IntroductiontoComputationalAdvertising
DisplayAds
TextualAds
Auctions

TodaysAgenda

IntroductiontoComputationalAdvertising
DisplayAds
TextualAds
Auctions

Introduction
WhyisComputationalAdvertisingImportant?
Multibilliondollarbusiness
Suppliesmostoftherevenueforsearchengines

Whydoesitwork?
massivescale,automated
learnfromthedata

Adtypes
Sponsoredsearchwhichservesadsinresponseto
searchqueries
Contentmatchwhichplacesadsonthirdpartypages
Displayadvertisingorbanneradsorgraphicalads
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SponsoredSearchAd

ContextMatchAd

DisplayAd(BannerAd)

ComparisonofComputationalAdswithTraditional
Ads
Classical
Relativelyfewvenuesmagazines,billboards,newspapers,
handbills,TV,etc
Highcostpervenue($3MilforaSuperBowlTVad)
Nopersonalizationpossible
Targetingbythewisdomofadpeople
HardtomeasureROI

Computationalalmosttheexactopposite

Billionsofopportunities
Billionsofcreatives
Totallypersonalizable
Tinycostperopportunity
Muchmorequantifiable

ContextualAdBasics

Fourentities
ThepublisheristheownerofWeb
pagesonwhichadvertisingis
displayed.
Theadvertiserprovidesthesupplyof
ads.
Theadnetwork(exchange)isa
mediatorbetweentheadvertiserand
thepublisher,whoselectstheads
thatareputonthepages.
EndusersvisittheWebpagesofthe
publisherandinteractwiththeads.

Revenue models
CPM: Cost Per iMpression
CPC: Cost Per Click
CPV: Cost Per Visitor
CPA/CPT: Cost Per
Action/Transaction

Problems
Manualorautomatedreviewprocessto
ensurethatadvertisercontentisinfact
relevanttothetargetkeyword
Matchingadvertisercontenttouserqueries
astheyarereceived
Displayingadvertisercontentinsomerank
order
Gatheringdata,measuringclicks,charging
advertisersbasedonconsumerclicks,etc.
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RevenueModels
UnderCPM:Revenue=N*CPM
UnderCPC:Revenue=N*CTR*CPC
CPCdependsonauctionmechanism

UnderCPA:Revenue=N*CTR*Conv.Rate*CPA
Revenuedependence
CPM:websitetraffic
CPC:+adrelevance
CPA:+landingpagequality

From1stto3rd:morerelevantforadvertisers,
biggerpricesandbids!
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TodaysAgenda

IntroductiontoComputationalAdvertising
DisplayAds
TextualAds
Auctions

12

DisplayAds/BannerAds/GraphicalAds
Justpickads
graphicallydisplayed
mostlyforbrandawareness
revenuemodelistypicallyCPM

Adsaretargetedatparticulardemographics
GMadsonYahooautosshownto"malesabove55"
Mortgageadshownto"everybodyYahooFrontpage"

Bookaslotwellinadvance
"2MimpressionsinJannextyear"
impressionsguaranteedbytheadnetwork!
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DisplayAdsProblems
Twotypesofonlinegraphicaladvertising
Guaranteeddelivery(GD)
Performancegraphicaladvertising(nonguaranteeddelivery,
NGD)

Guaranteeddelivery
Contractbookedbasedontargetingattributesofanimpression:
age,income,location,
Eachcontracthasadurationandadesirednumberof
impressions
IssuesinGD

Contractpricing
Trafficforecasting
Optimalimpressionallocationtotheactivecontracts
Demographicsoverlap
Howmuchwilladvertiserswanteachdemographic
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PerformanceofDisplayAds
Graphicaladscanalsobeplacedbasedon
performanceCPM/CPC/CPA
OptimizationProblemDefinition=MaxCTR
Matchingapproaches
Reactive:exploretheplacementofaparticularadon
differentpages;foreachpageobserveachievedCTR;once
theCTRsarelearned,givenpage,picktheadwithhighest
observedCTR
Predictive:generatefeaturesfortheadusingrelatedads
(sameadvertiser),landingpage,oradvertisermetadata
predictperformancebasedonpageandadfeatures
Hybrid:(1)and(2)arecomplementaryandcanbe
combined
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TodaysAgenda

IntroductiontoComputationalAdvertising
DisplayAds
TextualAds
Auctions

16

TextualAds:ContentMatchandSponsoredSearch
Ads
Contentmatch
Pickadsbymatchingthemtocontent
Theuserintentisunclear

Sponsoredsearch
Givenasearchquery
Pickadsbymatchingthemtothequery
Userdeclaresherintention
QueryisshortandlessnoisythanContentMatch

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AnatomyofaSponsoredSearchAd

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TextualAdSchema

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MainIssues
Givenaquery
Selectthetopkadstobeshownonthekslotsin
ordertomaximizetotalexpectedrevenue

Whataffectsthetotalrevenue
Relevanceoftheadtothequery
Bidsontheads
Userexperienceonthelandingpage(adquality)

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SelectinganAd

Eachparticipanthasitsownutility

AdvertiserswantROIandvolume
Userwantsrelevance
Publisherwantsrevenueperimpressions/search
Adnetworkwantsrevenueandgrowth

Adselection:optimizeforagoalthatbalancestheutilitiesofthefour
participants
IRbasedAdRelevanceComputation
Useasearchenginetomatchadstocontext
Adsarethedocuments
Context(userqueryorwebpagecontent)arethequery

Problem:wordmatchesmightnotalwayswork
Needtoextracttopicalinformation

Bidvalueforad(usuallysecondpriceauctionisused)
Machinelearningfromclicks
EstimateCTR=Pr(click|ad,query,user)
AdAdsimilarity&collaborativefiltering
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AdSelectionApproaches
Exactmatch
Theadsbidphrasematchesthequery
Needquerynormalization
Cannotbidonallfeasiblequeries

Broadmatch:translatethequeryintobidphrases
Theadplatformfindsgoodadsforagivenquery(the
advertiserdidnotbidonthatspecifickeyword,but
thequeryisdeemedofinteresttotheadvertiser)
Pricingcanbemisleading
SignificantportionofthetraffichasnobidsL
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QueryRewriting

Rewritetheuserquery into
Useexactmatchtoselectadsfor
Offlinevs online

Offlinecanbedoneonlyforqueriesthatrepeatoften
Online

UsingSearchlogs(frequentrewritesfromquerylogs)

Forrarequeriesofflinenotpracticalorsimplydoesnotwork
Lotlesstimetodoanalysis(afewms)

insertions:gamecodes>videogamecodes
substitutions:johnwayne bust>johnwayne statue
deletions:skateboardingpics>skateboarding
spellcorrection:realeastate >realestate
specialization:jobs>marineemployment

UsingClicks
SimRank onbipartitegraphofqueriesandads
Edgeweightscouldbe#clicksfor(ad,query)pairorCTR
Iterativecomputation

Twoqueriesaresimilariftheyareconnectedtosimilarads
Twoadsaresimilariftheyareconnectedtosimilarqueries

pc

10
20

camera
Digital
camera

5 30
7

Bestbuy.
com

15

Teleflora.
com

tv
16
flower

Hp.com

15

Orchids.
com

SimilarQueries
Camera DigitalCamera
pc camera
pc digitalcamera
tv camera
tv digitalcamera
pctv
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AdRelevancebyOnlineLearning
Offline(batched)learning
Learnedfromhistoricaldata
Slowresponsetoemergingpatterns
Initialbiasesnevercorrected
ifthesystemnevershowedgolfclassesforiPoditcan
neverlearnifthismatchingisgood.

OnlineLearning
combineexploitationwithexploration
pickadsthataregoodaccordingtocurrentmodel
pickadsthatincreaseyourknowledgeaboutthe
entirespaceofads
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OnlineContentMatching
WebadvertisingfortwotypesofWebpages
Staticpage(Offline):Matchingofadscanbebasedon
prioranalysisoftheirentirecontent
Workswellforstaticcontentpagesthataredisplayed
repeatedly

Dynamicpage(Online):Adsneedtobematchedto
thepagewhileitisbeingservedtotheenduser.Thus,
limitingtheamountoftimeallottedforitscontent
analysis.

Whenauserviewsapage,theadselection
enginehasonlyacouplehundredmillisecondsto
providetheads.
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CollaborativeFilteringConnection
TraditionalIRbasedonfixedqueryresultrelevance
Ads:RankbyCTRprobability
ContinuousCTRfeedbackforeach(query,ad)pair
Learnthebestmatchbetweenauserinagivencontext
andasuitableadvertisement

Dataissparse,inordertogetthebestmatch,weneed
tofindsimilarads,pages,andusers
Makeuseofdyadicinteractionsystems
(recommendationsystems)
Notedyadisapair:(user,movie),(user,ad),etc.
Predictresponsetounknowndyadsusingcollaborative
fitering

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SponsoredSearch(BigPicture)
Adscorpus=Bidphrases+Title+URL+landingpage
Adquery=Searchkeywords+context(location,userprofile,search
history)
SponsoredSearch:Context=Websearchresults
Contentmatch,banners:Context=Publisherpage

Adsearchissimilartowebsearchbutwiththesedifferences

Addatabaseissmaller
Addatabaseentriesaresmall
RankingdependsalsoonbidsandCTRs
Thequery(currentpage)canbemuchlargerthanthetarget
document

Findingthebesttextualadisaninformationretrievalproblemwith
multiple,possiblecontradictoryutilityfunctions

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InteractionsinSponsoredSearch
Advertisers
Submitadsassociatedtocertainbidphrases
Bidforposition
PayCPC

Users
Makequeriestosearchengine,expressingsomeintent

Searchengine
Executesqueryagainstwebcorpus+otherdatasources
Executesqueryagainsttheadcorpus
DisplaysaSearchResultsPage(SERP)=integrationofweb
results,otherdata,andads
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CPCCosts

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BudgetandOtherFactors
Advertiserscanspecifybudgets
Budgetscanbeimplementedasfollows

Spenditquicklytilloutofmoney
Spenditslowlytillendofday
Spenditasthesearchengineseesfit
Spenditonacertaindemographyofusersonly

Therearesometimesreserveprices=minimum
costtobeshownonagivenkw(dependsonkw)
Therearesometimesminimumbids=
minimumbidrequiredtoparticipateinaction
(coulddependonadvertiserandkeyword)
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ThreeProblemsforaSearchEngine
Adretrieval
Matchtoquery/context

Orderingtheads
Pricingonaclickthrough

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TodaysAgenda

IntroductiontoComputationalAdvertising
DisplayAds
TextualAds
Auctions

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ShortIntroductiontoGameTheory
Setofplayers.
Asetofstrategiesavailabletothoseplayers(eachhasits
ownset)
Aspecificationofpayoffsforeachplayerforeach
combinationofstrategies.
Eachplayerspayoffdependsonthestrategychosenby
everyotherplayer!
Dominantstrategy
Strategy=acompletedefinitionofhowaplayerwillplaya
game.
StrategyX(foraplayer)dominatesanotherstrategyYifforall
choicesbyotherplayer(s),XyieldsatleastasmuchpayoffasY.
StrategyXisdominantifitdominatesallotherstrategies.

33

NashEquilibrium
Nashequilibrium=choiceofstrategiesinwhicheachplayer
isassumedtoknowtheequilibriumstrategiesoftheother
players,andnoplayerhasanythingtogainbychanginghis
ownstrategyunilaterally.
Purestrategy=deterministicdefinitionofhowaplayerwill
playagame
Mixedstrategy=anassignmentofprobabilitiestoeach
purestrategytheplayersthrowcoinstopickthestrategy
theyfollow
AgamecouldhavemanyNashequilibria ornone,ifplayers
mustfollowpurestrategies.
Nashtheorem:Ineverynplayergameinwhichevery
playerhasfinitelymanypurestrategiesthereexistsasetof
mixedstrategiesthatformsaNashequilibrium.
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GameTheoryforAds
Advertisersmakebids(theirmoves)
Advertiserseekattentionandvolume prefer
higherpositions
Enginesorderadsandpriceclicksaccordingto
somerulesknowntoallbidders
Thebidderscanallkeepreactingtoeach
other

35

TypesofAuctions

Firstpricesealedbid
Biddersplacetheirbidinasealedenvelope
Simultaneouslygivethemtotheauctioneer.
Highestbidderwins,payshisbid.

Secondpricesealedbidauctions(Vickrey auctions)
Biddersplacetheirbidinasealedenvelope
Simultaneouslygivethemtotheauctioneer.
Highestbidderwins,payspriceequaltothesecondhighestbid.

OpenAscendingbidauctions(Englishauctions)
Priceissteadilyraisedbytheauctioneer
Biddersdropoutoncethepricebecomestoohigh.
Eventuallythereisonlyonebidderwhowinstheauctionatthecurrentprice.

OpenDescendingbidauctions(Dutchauctions)
Pricestartsatinfinityandissteadilyloweredbytheauctioneer
Thefirstbiddertoacceptthecurrentprice,wins
Paysthecurrentprice.

36

SecondPriceAuction(Vickrey Auction)
Allbuyerssubmittheirbidsprivately
Buyerwiththehighestbidwins;paystheprice
ofthesecondhighestbid

37

Truthfulness(IncentiveCompatibility)ofVickrey
Auction
Anauctionmechanismistruthful,ifthedominantstrategyforevery
playeristotruthfullybidtheirownvalue.
Tellingthetruthisoptimalinsecondprice(Vickrey)auction
Supposeyourvaluefortheitemis$100;ifyouwin,yournetgain
(loss)is$100price
Ifyoubidmorethan$100
Youincreaseyourchancesofwinningatprice>$100
Youdonotimproveyourchanceofwinningfor<$100

Ifyoubidlessthan$100
Youreduceyourchancesofwinningatprice<$100
Thereisnoeffectonthepriceyoupayifyoudowin

Dominantoptimalstrategy:bid$100
Key:Thepriceyoupayisoutofyourcontrol
Vickreys NobelPrizedueinlargeparttothisresult!
38

VickreyClarkGroves(VCG)
GeneralizationofVickrey
Worksforarbitrarynumberofgoods,includingallowing
combinationbids
Auctionprocedure:
Collectbids
Allocategoodstomaximizetotalsocialvalue(goodsgotothosewho
claimtovaluethemmost)=maximumweightedmatching
Payments:Eachbidderbpayshisexternality=(maxTSVwithoutbs
participation)(maxTSVforeveryoneelsewhenbparticipates)
NB:(maxTSVforeveryoneelsewhenbparticipates)=maxweighted
matchingwithoutb&withoutbsitems.

Incentivecompatible(truthful)=allthebiddersdobestwhenthey
bidtheirtruevaluei.e.revealtheirprivateinformation

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VCGExample

MaxmatchingwithoutAlicedoesnotdependonherbids
MaxmatchingwithoutAliceandherassignedappledoesnotdependonherbids
PricepaidbyAliceforherappledoesnotdependonherbid
Shouldnotbidmorethanhervaluemightpaytoomuch!
Shouldnotbidlessmightnotgetit!

ThusVCGleadstotruthfulness

40

Howdoesthesponsoredsearchauctionwork
Searchengines
runkeywordauctionstosellavailableinventoryofad
positions

Advertisers
submitbidswhichindicatetheirwillingnesstopayper
click
forexample,bidof$1.75perclickforthekeywordlaptop

Thesearchengineorderstheadsindescending
order
Bidisakeydeterminantofadposition
OtherfactorssuchasCTRarealsofactoredin
41

UniqueFeaturesoftheMarketforInternetAds
Biddingtakesplacecontinuously
Thesearchengineseffectivelysellflows
(clicks/hour)
Notunlikeelectricitymarketsunusedcapacity
iswasted
Ontheotherhand,userutilitymightbe
impairedbyexcessiveadvertisement

42

"Unit"ofAdvertisement
Advertiser'sperspective:transactionisa"unit"
Pricingmodel:paypertransaction(CPT/CPA)

Searchengine'sperspective:exposureisa"unit"
(CPM)
Pricingmodel:payperexposure

Middleground:clickisa"unit"
Pricingmodel:payperclick(CPC)

Allthreepricingmodelsarewidelyused
Payperclickdominatessponsoredsearch
43

GeneralizedFirstPriceAuctions
1997auctionrevolutionbyOverture(thenGoTo.com,createdat
Idealab)
Payperclickforaparticularkeyword
Initiallycrazyidea,meanttocombatsearchspam
Searchenginedestinationthatranksresultsbasedonwhoiswilling
topaythemost
Withalgorithmicsearchenginesoutthere,whowoulduseit
Commercialwebsiteswould!(Muchbetterthantodependon
ranking!)

Results
Linksarrangedindescendingorderofbids
Payyourbid(Firstprice)
OverturebecameaplatformforYahoo!andMSNImperfect
mechanism:unstableduetodynamicnatureoftheenvironment

Problem:GFPisunstablebecausebidscanbeadjusteddynamically
44

ExampleonGFP
Twoslotsandthreebidders
adinfirstslot:200clicksperhour
adinsecondslot:100.

Bidders1,2,and3havevalues:$10,$4,and$2
Ifbidder2bids$2.01,tomakesurehegetsaslot
Bidder1willnotwanttobidmorethan$2.02
Bidder1getsthetopspot,butthenbidder2will
wanttorevisehisbidto$2.03togetthetopspot
Bidder1willinturnraisehisbidto$2.04,andso
on.

45

GeneralizedSecondpriceAuctions

GeneralizedSecondPrice(GSP)Auctions
2002GSPimplementedbyGoogle
Yahoo!/OvertureandothersswitchedtoGSP
Twowayofgeneralizing:
Bidranking:Ordertheadsbytheirbids.Renameadssoadi endsin
positioni.BidderinpositionIpaysbid(i+1).
Revenueranking:Ordertheadsbyexpectedrevenueinpositioni
assumingmaximumbids,thatisbyb(i)*ctr(i).

Renameadssoadi endsinpositioni.
Bidderinpositioni paysbid(i+1)*ctr(i+1)/ctr(i)
Notethatbidderi payslessthanbid(i)sincebid(i)*ctr(i)>bid(i+1)*ctr(i+1)
IfallCTRsarethesame,revenuerankingisthesameasbidranking!

CTRcanbeestimatedforanadvertiserbasedonclickhistory

46

GSPExample
SameexampleunderGSPmechanismwithbidranking
Twoslotsandthreebidders.
Firstslot200clicksperhourregardlessofad
Secondslotgets100regardlessofad
Bidders1,2,and3havevaluesperclickof$10,$4,and$2,
respectively.

Ifalladvertisersbidtruthfully,thenbidsare$10,$4,
$2.

Paymentsforslotoneandtwoare$4and$2perclick.
Totalpaymentofbidder1is$800=$1200payoff
Totalpaymentofbidder2is$200=$200payoff
Inthisexampletruthtellingisanequilibriumbecauseno
biddercanbenefitbychanginghisbid.
47

IsGSPaVCG?
GSPisnotVCG GSPhasnodominant
strategies
Truthtellingisgenerallynotanequilibrium
Withonlyoneslot,VCGandGSPareidentical
Withseveralslots,themechanismsare
different
GSPchargesbidderi thebidofbidderi+1(In
practice+$0.01)
VCGchargesbidderi forhisexternality
48

TruthtellingisnotadominantstrategyunderGSP

Proof:Examplewiththreebiddersandtwoslots
Perclickvaluesare$10,$4,and$2
CTR'sare200and199
(Assumealladsareequallyattractive)
Ifallbidtruthfullybidder1bids$10andpays$4
sohispayoffis
($10$4)*200=$1200

Ifbidder1bids$3(andpays$2)hispayoffis:
($10$2)*199=$1592>$1200
49

SameExampleusingVCG
LetuscomputeVCGpaymentsfortheexampleconsideredbefore.
Twoslotsandthreebidders.
Firstslot200clicksperhour
Secondslotgets100.
Bidders1,2,and3havevaluesperclickof$10,$4,and$2,respectively.

Thesecondbidder'spaymentis$200,asbefore(externality
imposedon3wholoses$200=valueforhimoftheslothedoes
notget!)
However,thepaymentofthefirstadvertiserisnow$600
$200fortheexternalitythatheimposesonbidder3(byforcinghim
outofposition2)+
$400fortheexternalitythatheimposesonbidder2(bymovinghim
fromposition1toposition2andthuscausinghimtolose(200
100)=100clicksperhour).

Notethatinthisexample,revenuesunderVCGarelowerthan
undertruthtellingequilibriumofGSP!
50

NashEquilibriumforGSP
Locallyenvyfreeequilibrium
Fixedpointwherebiddersdontwanttomoveup
ordown

Biddersfirstchoosetheoptimalpositionfor
them:positioni
Withinrangeofbidsthatlandthemin
positioni,bidderchoosespointofindifference
betweenstayingincurrentpositionand
swappingupwithbidderinpositioni1
51

Whatdowehave?
GFPisnotstable
ChoosebetweenGSPandVCG
GSPisnottruthful
VCGistruthfulandstablebutnotreallyused(revenue?)

AdaptationofVCG
Thehigherthebid,thebettertheposition
ThelastbiddertogetaslotpayssameasGSP
Totalpaymentofbidderinpositioni underVCG,p(i)

isexpectednumberofclicksatpositioni
isbidof highestbidder

52

TakeawayMessages
ComputationalAdvertisingisanewgrowing
fieldwithlotsofinterestingproblems.
Twomaintypesofadsaredisplayadsand
textualads.
Westudiedinterestingproblemsindisplaying
graphicadsandtextualads.
Finally,wediscussedvariousauction
mechanismslikeGFP,GSP,VCGandan
adaptationofVCG
53

FurtherReading
AlgorithmicChallengesinOnlineAdvertising,Deepak
AgrawalandDeepayan Chakrabarti.CIKM2008Tutorial
ComputationalAdvertisingcourse@Stanford:
http://www.stanford.edu/class/msande239/
Edelman,Ostrovsky,andSchwarz,InternetAdvertising
andtheGeneralizedSecondPriceAuction,2005
Varian,PositionAuctions,2006
Lahaie,Pennock,Saberi,Vohra,SponsoredSearch,
Chapter28inAlgorithmicGameTheory,Cambridge
UniversityPress,2007

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PreviewofLecture14:ComputationalAdvertising
(Part2):ContextualAdvertising
Contextualadvertisingbasics
Adselectionincontextualadvertising
PhraseExtractionforContextualAdvertising
IRmethodsforcontentmatchadretrieval
HolisticviewatthepageinContextual
Advertising
Whentoadvertise
Searchbasedadselectionforsponsoredsearch
Predictingclicks

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Disclaimers
Thiscourserepresentsopinionsoftheinstructor
only.ItdoesnotreflectviewsofMicrosoftorany
otherentity(exceptofauthorsfromwhomthe
slideshavebeenborrowed).
Algorithms,techniques,features,etc mentioned
heremightormightnotbeinusebyMicrosoftor
anyothercompany.
Lotofmaterialcoveredinthiscourseisborrowed
fromslidesacrossmanyuniversitiesand
conferencetutorials.Thesearegratefully
acknowledged.
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Thanks!

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