Monetization in Product and Display Advertising Marketplaces
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This dissertation considers monetization strategies in the context
of online product and display ad marketplaces.
The first chapter considers online marketplace platforms that trade-off
their fees from advertising with commissions from product sales. While
featuring advertised products can make search less efficient (lowering
transaction commissions), it incentivizes sellers to compete for better
placements via advertising (increasing advertising fees). We consider
this trade-off by modeling both sides of the platform. On the demand
side, we develop a joint model of browsing (impressions), clicking,
and purchase. On the supply side, we consider sellers' valuation and
advertising competition under various fee structures (CPM, CPC, CPA)
and ranking algorithms.
Using buyer, seller, and platform data from an online marketplace
where advertising dollars affect the order of seller items listed,
we explore various product ranking and ad pricing mechanisms. We find
that sorting items below the fifth position by expected sales revenue
while conducting a CPC auction in the top 5 positions yields the greatest
improvement in profits (181%) because this approach balances the
highest valuations from advertising in the top positions with the
transaction revenues in the lower positions.
The second chapter considers how a publisher should set reserve prices
for real-time bidding (RTB) auctions when selling display advertising
impressions through ad exchanges. Through a series of field experiments,
we show that a reserve price set based on an imputed demand curve
(in the absence of constraints) can increase publisher's revenues
by 32%, thereby affirming the importance of reserve price in maximizing
publisher's revenues. Further, we find that advertisers increase their
bids in response to an experimental increase in reserve price and
show this behavior is consistent with the use of a minimum impression
constraint to ensure advertising reach.
Based on this insight, we construct an advertiser bidding model and
use it to infer the overall demand curve for advertising as a function
of reserve prices. Using this constraint-based demand model, we solve
the publisher pricing problem. Incorporating the minimum impression
constraint into the reserve price setting process yields a 50% increase
over a solution that does not incorporate the constraint and an additional
increase in profits of 9 percentage points.
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Rights for Collection: Duke Dissertations