Exploring Optimal Frequency Caps in Real Time Bidding Advertising

Benefited from the high-speed development of Internet and the popularization of big data technology, Real Time Bidding (RTB) emerged and developed quickly, and has become one of the most important and popular model for online computational advertising. In the pay-per-impression based RTB advertising, frequency capping is undoubtedly one of the most crucial issues faced by advertisers and Demand Side Platforms (DSPs), since there are generally vast amount of ad requests in RTB markets, among which many may be triggered by the same target audience. As such, choosing the optimal frequency cap considering all the advertisers becomes a critical issue faced by DSPs. Considering that displaying one advertisement multiple number of times to the same user will diminish the advertising effect, we introduce the concept of discount factor and establish an optimization model of frequency capping to seek for the optimal frequency cap for each advertiser. We also design some experiments to validate our proposed model by utilizing the computational experiment approach, and the experimental results show that the optimal frequency cap can be influenced by the values of the discount factors, and higher value of the discount factor can deduce the advertising effect of larger frequency cap. Moreover, when the discount factors of the advertisers take different values, there also exists an optimal frequency cap, at which the advertisers can get the expected maximum revenue in the long run.

I. Introduction

When online display advertising meets big data analysis technology, Real Time Bidding (RTB) emerged as the most popular business model of computational advertising. On one hand, benefited from the advantages of RTB advertising such as higher targeting precision, better marketing effect, and lower promotion costs, more and more advertisers preferred RTB advertising to promote their products or service. On the other hand, RTB advertising also attracts a large number of of publishers due to its stronger traffic cashability and higher value enhancement of the traffics.