Serving two masters? Optimizing mobile ad contracts with heterogeneous advertisers

Our research question is motivated by a real problem faced an existing demand aggregator. The aggregator represents multiple advertisers, each of whom signs one two types contracts with the for bidding on RTB (real-time bidding) platform. A quality contract occurs cost-per-impression (CPM, i.e., cost per thousand impressions) basis. advertiser promised minimum number impressions and pays CPM that function targeting as measured realized click-through rate (CTR). In performance CPC (cost-per-click) basis constrained budget. We develop solve generalized profit maximization jointly optimizes aggregator's allocation decisions. policy optimally assigns arriving opportunity to specific advertiser. then computes bid amount based estimated click probability opportunity. solution has nice theoretical properties. First, neither depends memory carried in system, is, sequence previous states decisions, making easy implement. Second, shown have threshold structure. This enables assignment opportunities into distinct sets, corresponding advertising type. assessment impact change various parameters used derive several interesting important implications management contracts.