Optimal Internet Media Selection

• Activity Number: 436
• Type: Contributed
• Date/Time: Tuesday, August 11, 2015 : 2:00 PM to 3:50 PM
• Sponsor: Section on Statistics in Marketing
• Author(s): Courtney Paulson* and Gareth James and Lan Luo
• Companies: and University of Southern California and University of Southern California
• Keywords: Internet media selection ; Budget allocation ; Generalized loss functions ; Penalized optimization

Abstract

In today's digital world, Internet advertising campaigns are becoming increasingly important. Further, it is uncommon for a major Internet advertising campaign not to include an online display component. Currently, firms face many Internet advertising challenges: a large number of websites, huge variation in website traffic and cost, and inevitable correlations in site viewership. Due to the inherent NP-hard nature of selecting an optimal subset of websites, existing approaches can only handle Internet media selection on the order of ten websites. We propose a method which optimizes a penalized loss criterion and is thus efficient enough to allocate advertising budgets over thousands of websites. We also illustrate this method is flexible enough to accommodate common practical Internet advertising considerations such as targeted consumer demographics, mandatory media coverage to matched content websites, and frequency capping of ad exposure. Our empirical investigation further demonstrates that, while performing similarly to existing methods in small website settings, the proposed approach can be used effectively in online advertising campaigns over thousands of websites.