EURO 2024 Copenhagen
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2296. Sequential sponsored-products and off-amazon advertising optimization for etailers

Invited abstract in session WC-40: Experimental economics and game theory 2, stream Experimental economics and game theory.

Wednesday, 12:30-14:00
Room: 96 (building: 306)

Authors (first author is the speaker)

1. Yina Ning
Laboratory for AI-Powered Financial Technologies
2. Yangyang Xie
Automation/Management Sci., Tsinghua Univ./CityU of HK
3. Houmin Yan
City University of Hong Kong

Abstract

The Sponsored-Products (SP) advertisement is a popular way for promoting products on Amazon. Etailers can choose and pay for specific keywords to secure ad placements for their products. These keywords are the ones that shoppers are likely to search for when looking for products on Amazon. To improve the efficiency of SP ads, etailers who have a large catalog of products often create ad groups for products with similar attributes. An ad group consists of a set of products and a set of keywords, and all the products in the ad group share the same keywords set. Etailers may also choose to link to external websites for advertising their products and attracting consumers, which is called off-Amazon (OA) ads. This study focuses on the sequential SP and OA ads optimization problem for etailers. Practically, many etailers set sales targets for products as manufacturing and logistics are planned ahead of time. Hence, we consider that the objective of the etailer is to minimize the expected long-run average cost associated with advertising and the cumulative deviation between the sales target and actual sales. When the mean of the sales number per unit time (i.e., sales rate) for each product is known, we characterize the optimal sequential Sponsored-Products and off-Amazon advertising policy (abbreviated as SSPOA policy) for products in an ad group, which is of a threshold type. However, in reality, etailers may not know the exact mean of sales rates, and therefore the SSPOA problem

Keywords

Status: accepted

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