Auto pricing Strategy for Real time bidding in advertising: A dynamic programming approach

Unlike the traditional advertising practices, in the process of Real time bidding (RTB), the impressions of a mobile application or a website are mapped to a particular advertiser through a real time auction, which triggers after an application is launched. As one of the key components of the RTB ecosystem, demand side platform (DSP) furnishes the advertisers a full pledge window to bid for available impressions. Due to fast growing market of mobile applications and websites, the selection of the most pertinent target audience to a particular advertiser, is not a simple human mediated process. Therefore, we propose an Auto Pricing Strategy (APS) approach to determine the applications to bid for and their respective bid prices from the advertisement agency perspective. We applied the APS on a real RTB bidding data and demonstrated how it outperforms the existing RTB approaches with a higher conversion rate for the same target spend.