An Alternative Auction System to Generalized Second-Price for Real-Time Bidding Optimized Using Genetic Algorithms

Real-Time Bidding is a new Internet advertising system that has become very popular in recent years. This system works like a global auction where advertisers bid to display their impressions in the publishers' ad slots. The most popular system to select which advertiser wins each auction is the Generalized second-price auction, in which the advertiser that offers the most, wins the bet and is charged with the price of the second largest bet. In this paper, we propose an alternative betting system with a new approach that not only considers the economic aspect, but also other relevant factors for the functioning of the advertising system. The factors that we consider are, among others, the benefit that can be given to each advertiser, the probability of conversion from the advertisement, the probability that the visit is fraudulent, how balanced are the networks participating in RTB and if the advertisers are not paying over the market price. In addition, we propose a methodology based on genetic algorithms to optimize the selection of each advertiser. We also conducted some experiments to compare the performance of the proposed model with the famous Generalized Second-Price method. We think that this new approach, which considers more relevant aspects besides the price, offers greater benefits for RTB networks in the medium and long-term.

Automated summary

Real-Time Bidding (RTB) is a popular internet advertising system where advertisers bid to display their ads. The most popular method is the Generalized Second-Price auction. This paper proposes an alternative betting system that considers not only economic factors but also other relevant aspects of the advertising system. It also introduces a methodology using genetic algorithms to optimize advertiser selection. Experiments show that this approach offers greater benefits for RTB networks in the medium and long term.