User Response Learning for Directly Optimizing Campaign Performance in Display Advertising

Learning and predicting user responses, such as clicks and conversions, are crucial for many Internet-based businesses including web search, e-commerce, and online advertising. Typically, a user response model is established by optimizing the prediction accuracy, e.g., minimizing the error between the prediction and the ground truth user response. However, in many practical cases, predicting user responses is only part of a rather larger predictive or optimization task, where on one hand, the accuracy of a user response prediction determines the final (expected) utility to be optimized, but on the other hand, its learning may also be influenced from the follow-up stochastic process. It is, thus, of great interest to optimize the entire process as a whole rather than treat them independently or sequentially. In this paper, we take real-time display advertising as an example, where the predicted user's ad click-through rate (CTR) is employed to calculate a bid for an ad impression in the second price auction. We reformulate a common logistic regression CTR model by putting it back into its subsequent bidding context: rather than minimizing the prediction error, the model parameters are learned directly by optimizing campaign profit. The gradient update resulted from our formulations naturally fine-tunes the cases where the market competition is high, leading to a more cost-effective bidding. Our experiments demonstrate that, while maintaining comparable CTR prediction accuracy, our proposed user response learning leads to campaign profit gains as much as 78.2% for offline test and 25.5% for online A/B test over strong baselines.