Is More Always Merrier? A Cloud-Based Architecture to Procure Impressions from Multiple Ad-Exchanges

We consider an ad-firm that acts on behalf of advertisers to execute mobile, in-app, ad campaigns. The firm commits to provide an advertiser a specified number of ad placements (impressions) on mobile apps, usually in a specified location, and within a specified time horizon. The supply for ad space arrives in real-time – in the form of bid-requests from one or more mobile ad-exchanges. The ad-firm needs to bid on each impression in such a way that the goals of several on-going campaigns are met at minimum cost.The ad-firm needs simultaneously executes multiple campaigns, and gets its supply (for ad space, or impressions) from multiple mobile ad-exchanges. By working with more than one ad-exchange, the direct cost of procuring the necessary impressions can be lowered. However, this lower cost needs to be balanced with the cost of the additional computing resources needed to work with multiple mobile ad-exchanges, as well as the (possible) extra cost of meeting the minimum spend (or participation fee) imposed by each ad-exchange.In this study, we propose a cloud-based architecture to procure impressions for an ad-firm. There are two key decisions that the firm needs to make. First, it needs to select the set of mobile ad-exchanges to obtain its supply. Each mobile ad-exchange is characterized by specific supply uncertainties, location dependent win-curves, and a participation fee. Second, for each ad-exchange and location, the ad-firm needs to determine its bidding policy, i.e., how much to bid for each bid-request. We show that the proposed near-optimal bidding strategy – the strategy to bid at each exchange-location combination – is state independent.We first analyze a special case with identical mobile ad-exchanges and show that, depending on the particular parameter setting, the near-optimal number of ad-exchanges and the near-optimal bid amount can be weak complements or substitutes. We next solve the general problem of selecting among multiple non-identical ad exchanges.Finally, we propose a supply flexibility architecture that can further lower procurement costs. The ideas of this paper are applied to a real problem and the savings from our approach (about 33% lower cost) are demonstrated