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Revenue Management; Online Advertising; Dynamic Programming ; Linear Programming
Roels G., Fridgeirsdottir K. (2009). Dynamic Revenue Management for Online Display Advertising Journal of Pricing and Revenue Management, 8(5), pp. 452-466.
In this paper, the authors propose a dynamic optimisation model to maximise a web publisher's online display advertising revenues. Their model dynamically selects which advertising requests to accept and dynamically delivers the promised advertising impressions to viewers so as to maximise revenue, accounting for uncertainty in advertising requests and website traffic.After characterising the structural properties of their model, the authors propose a Certainty Equivalent Control heuristic and then show with a real case study that our optimisation-based method outperforms common practices. These results highlight the importance of accounting for the opportunity cost of capacity allocation in advertisement contract negotiation for globally maximising online publishers’ revenues.