Dynamic Impression Budget for Unique Product Inventory
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Solution Overview
Problem
Existing recommendation systems fail to effectively advertise unique products due to their inability to consider product scarcity, leading to frustration for users and loss of goodwill when popular items are consistently advertised, resulting in quick inventory depletion and reduced sales opportunities.
Innovation Solution
A dynamic impression budget system calculates a real-time score for each product based on user intent and market factors, limiting advertisements when the product is likely to be purchased, ensuring only available products are promoted, thereby optimizing ad exposure and inventory management.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If popular products are broadly advertised to many users, then advertising reach and potential sales opportunities are improved, but inventory is quickly depleted and user frustration increases when products are unavailable
Solution Approach 1:
The system dynamically adjusts the impression budget for each product based on real-time inventory levels and purchase probability scores. As inventory decreases or purchase likelihood increases, the system automatically reduces advertising exposure, transforming the static advertising approach into a dynamic one that adapts to changing conditions.
Solution Approach 2:
The system implements a feedback loop where user interactions, inventory changes, and purchase events continuously inform the adjustment of impression budgets. The purchase probability score serves as a feedback mechanism that guides future advertising decisions, allowing the system to learn from past performance and optimize resource allocation.
2Quantity of substance
If unique products are advertised extensively, then more users are exposed to the product, but the product sells out quickly reducing overall sales opportunities
Solution Approach 1:
The system changes the parameter of impression budget allocation from a fixed or uniform approach to a variable approach based on purchase probability scores. By adjusting the impression budget parameter dynamically according to real-time conditions, the system optimizes the balance between advertising reach and sales conversion efficiency.
3Area of stationary object
If the same product is advertised to multiple users, then advertising coverage is maximized, but inventory is exhausted before all interested users can purchase
Solution Approach 1:
The system applies partial action by allocating impression budgets proportionally based on purchase probability scores rather than uniformly to all products. This allows the system to focus advertising efforts on products with higher conversion likelihood, avoiding excessive advertising spend on products that are unlikely to sell, thereby reducing inventory waste while maintaining adequate coverage.
Data Source
AI summary
One of more unique products can be selected for advertisement over a digital marketing channel. The selection is based on the calculation of a base impression budget, calculated per product per day, which calculation considers information related to a product, including supply and demand at the market level, characteristics of the property, and popularity of the listing. A real-time, or current, impression budget is calculated to determine whether a particular product should be recommended to a user. Every time the product is advertised to a user, a user intent value is calculated, indicating the user's likelihood of purchasing the product within a given period of time, along with the user intent of every user to which the product has been advertised. The user intent calculation may consider information specific to the user, such as the user's activity history and profile. These user intent values are subtracted from the base impression budget to obtain a real-time impression budget. If the real-time budget is greater than zero, the product will be advertised to a user. By these means, a bound is set on the number of times a product may be advertised before it is assumed to be sold.