Peeking Into the Black Box, Part 1: Recoset’s RTB Algorithms
This article is about the statistical and economic theory that underlies Recoset’s real-time bidding strategies, as a follow-up to my previous article on how we apply control theory to pace our spending, which I’m grandfathering in as “Part 0” of this short series.
At Recoset, we develop real-time bidding algorithms. In order to accomplish advertiser goals, our algorithms automatically take advantage of other bidders’ sub-optimal behaviour, as well as navigate around publisher price floors. These are bold claims, and we want our partners to understand how our technology works and be comfortable with it. No “trust the Black Box” value proposition for us.
Continue reading »
Peeking Into the Black Box, Part 2: Algorithm Meets World
In Part 1 of this series, I claimed that Recoset’s RTB algorithm is able to take advantage of other bidders’ sub-optimal behaviour and navigate around publisher price floor in order to achieve advertiser goals. I then described the algorithm, which applies what can be called a “bid truthfully, pace economically” approach. In this second part, I show how this algorithm can in fact live up to these claims.
When you bid truthfully and pace economically, you are always trying to allocate your budget to the auctions which look like the best deals, whether that means that the user is very likely to click, or that the price is low because fewer bidders are in the running or there is no publisher price floor.
Continue reading »