Category-Specific Bid Calculation System for Ad Placement
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Solution Overview
Problem
Advertisers face challenges in determining optimal bid amounts for keywords as users may purchase products from different categories than advertised, leading to either over or underbidding, resulting in suboptimal ad placement and potential lost sales.
Innovation Solution
A calculate bid system that uses category-specific advertising expense factors and conversion information to calculate bid amounts by aggregating financial benefits and expense factors for each category, then normalizing by conversions and multiplying by a forecast conversion rate.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Device complexity
If a single advertising expense factor is used for all product categories, then the bid calculation is simple, but it leads to overbidding or underbidding when users purchase products from different categories than advertised
Solution Approach 1:
The patent segments the advertising expense factor by product category, creating category-specific factors instead of using a single universal factor. This segmentation allows the system to account for different profitability characteristics of different product categories, thereby improving bid amount accuracy without significantly increasing complexity
Solution Approach 2:
The patent applies local quality by tailoring the advertising expense factor to each specific product category based on its profitability characteristics. Each category receives a customized factor that reflects its specific business value, rather than applying a uniform factor across all categories
2Measurement precision
If category-specific advertising expense factors are used, then bid amount accuracy is improved, but the calculation complexity increases
Solution Approach 1:
The patent performs preliminary action by pre-calculating and storing category-specific advertising expense factors based on historical data and category profitability characteristics. This pre-computation eliminates the need for complex real-time calculations during bid submission, maintaining simplicity while improving accuracy
3Productivity
If bid amounts are not optimized by category, then ad placement may be suboptimal, but determining optimal bids requires complex category analysis
Solution Approach 1:
The patent changes the parameter of advertising expense factor from a universal value to category-specific values. This parameter change enables the system to optimize bid amounts for different product categories by adjusting the expense factor to reflect each category's profitability, thereby improving advertising effectiveness
Data Source
AI summary
A calculate bid system calculates bid amounts based on category-specific conversion information and category-specific advertising expense factors. The calculate bid system collects conversion information for keywords used in advertisements for categories of items purchased during converting sessions. The calculate bid system uses collected category-specific conversion information along with category-specific advertising expense factors to calculate a bid amount for a keyword. The calculate bid system may calculate a bid amount by generating a product for each category of the financial benefit for the category multiplied by the advertising expense factor for that category. The calculate bid system may then aggregate the products and normalize the aggregated product by dividing by a collected number of conversions. The calculate bid system may then multiply the normalized aggregated product by a forecast conversion rate to give the bid amount.