Web advertising supports a large swath of the Internet ecosystem. It brings revenue to countless publishers that rent space on their pages for advertising: from small mom-and-pop shops to major search engines. It also providesvaluable traffic to numerous commercial Web sites and has fueled the development of Web search engines. Today, Web advertising is increasingly impacting the world outside the Internet by shaping the attitudes of numerous users. Computational advertising is a new scientific discipline that aims to formalize the problem of finding the best ad for a given user in a given context. In traditional advertising, the number of venues is small, the cost per venue is higher, and little or no personalization is possible (as for example in print magazines). In contrast, in online advertising there are billion of opportunities (page views), hundreds of millions of ads and it is possible to provide personalization with quantifiable results. This brings the advertising into the realm of the other ”computational” sciences. An overview of the current state of computational advertising can be found in http://msande239.stanford.edu/lectures/lecture-01.pdf. Display advertising is one of the two major advertising channels on the web (in addition to search advertising). Display advertising on the Web is usually done by graphical ads placed on the publishers’ Web pages. There is noexplicit user query, and the ad selection is performed based on the page where the ad is placed (contextual targeting) or user’s past activities (behavioral targeting). In both cases, sophisticated text analysis and learning algorithms are needed to provide relevant ads to the user.
Display advertising includes both a brand awareness component, where the aim of the advertiser is to promote awareness of a brand or a product, as well as a direct response component, where the aim of the advertiser is a click or conversion that leads to a visit to the advertiser’s Web site or other downstream economic activity. In addition, advertisers can also choose one of several payment types: CPM (Cost Per Mille — or 1000 — impressions/user visits), CPC (Cost Per Click), or CPA (Cost Per Action/Conversion, which may involve, for instance, filling out a form or an actual purchase). Dealing with multiple objectives and payment types again requires sophisticated learning algorithms to enable conversion and comparison between the payment types.
Finally, in display advertising, advertisers can choose to buy ads on a guaranteed basis many months in advance (these are typically CPM buys). For instance, an advertiser can request 100 million impressions during Superbowl 2011, and the publisher guarantees these visits ahead of time (even though the users have not actually shown up!). In essence, purchasing on a guaranteed basis is like purchasing goods on a futures market. Advertiser can also choose to buy on a non-guaranteed basis (these can be CPM, CPC or CPA buys), and in this case, they only pay for each impression, click or conversion. Many of the mechanisms required to support these forms of buying, such as traffic forecasting, ad selection, and pricing are just starting to attract the attention of the research community, and there is ample opportunity for impactful research in this area.