When Is More Merrier? A Cloud-Based Architecture to Procure Impressions from Multiple Ad Exchanges
Authors: Hosseini, Leila; Tang, Shaojie; Mookerjee, Vijay
Journal: Information Systems Research (2024)
<jats:p> This study proposes a method to reduce the cost for acquiring impressions for location-based, mobile advertising firms. Such firms act on behalf of advertisers to execute mobile, in-app, ad campaigns. Ad space is sold on ad exchanges that auction impressions one-at-a-time, on a real-time basis. In this paper, we examine whether ad firms should work with one or multiple ad exchanges to minimize the total procurement cost (equal to the cost incurred to acquire impressions plus the computing cost). By working with more ad exchanges, the ad delivery firm can bid lower on each exchange and potentially save on the total procurement cost. However, ad exchanges typically require ad firms to spend a minimum amount on the exchange. Hence, it is not smart to work with an exchange but acquire very few impressions from this exchange. Working with multiple exchanges also incurs a higher computing cost, corresponding to the computing capacity needed to support the bidding architecture. We solve an optimization problem to determine the optimal number of ad exchanges to use to acquire impressions and the optimal bidding policy on each of these exchanges. We also propose a novel, selective…