A Profit-Maximizing Strategy for Advertising on the e-Commerce Platforms

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Publication date: 30 October 2022

Abstract: Ads manager platform gains popularity among numerous e-commercial vendors/advertisers. It helps advertisers to facilitate the process of displaying their ads to target customers. One of the main challenges faced by advertisers, especially small and medium-sized enterprises, is to configure their advertising strategy properly. An ineffective advertising strategy will bring too many ``just looking clicks and, eventually, generate high advertising expenditure unproportionally to the growth of sales. In this paper, we present a novel profit-maximization model for online advertising optimization. The optimization problem is constructed to find optimal set of features to maximize the probability that target customers buy advertising products. We further reformulate the optimization problem to a knapsack problem with changeable parameters, and introduce a self-adjusted algorithm for finding the solution to the problem. Numerical experiment based on statistical data from Tmall show that our proposed method can optimize the advertising strategy given expenditure budget effectively.

Has companion code repository: https://github.com/styluck/adstrategy

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