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April  2019, 15(2): 833-854. doi: 10.3934/jimo.2018073

Exact and heuristic methods for personalized display advertising in virtual reality platforms

Kemal Kilic , , Menekse G. Saygi and  Semih O. Sezer

Faculty of Engineering and Natural Sciences, Sabanci University, Istanbul, 34956, Turkey

* Corresponding author: Kemal Kilic

Received  October 2016 Revised  December 2017 Published  June 2018

In this paper, motivated from a real problem faced by an online Virtual Reality (VR) platform provider, we study a personalized advertisement assignment problem. In this platform users log in/out and change their virtual locations. A number of advertisers are willing to pay for ad locations to reach these users. Every time a user visits a new location, the company displays one of the ads. At the end of a fixed time horizon, a reward is collected which depends on the number of ads of each advertiser displayed to different users. The objective is to assign ads dynamically to maximize the expected reward. The problem is studied in a framework where the behaviors of users are modeled with two-state continuous-time Markov processes. We describe two exact and four heuristic algorithms. We compare these algorithms and conduct a sensitivity analysis over problem and algorithm specific parameters. These are the main contributions of the current paper. Exact algorithms suffer from the curse of dimensionality, hence, heuristic methods might be considered instead in some cases. However, exact methods can also be used as part of heuristics since the experimental analysis demonstrates that they are robust for parameters that influence the computational requirements.

Keywords: Stochastic optimization, Markov processes, dynamic programming, personalized advertisement, Virtual Reality.
Mathematics Subject Classification: Primary: 90C40; Secondary: 90C39.
Citation: Kemal Kilic, Menekse G. Saygi, Semih O. Sezer. Exact and heuristic methods for personalized display advertising in virtual reality platforms. Journal of Industrial & Management Optimization, 2019, 15 (2) : 833-854. doi: 10.3934/jimo.2018073
References:
[1]

S. M. Bae, S. C. Park and S. H. Ha, Fuzzy web ad selector based on web usage mining, Intelligent Systems, IEEE, 18 (2003), 62-69.   Google Scholar

[2]

M. C. Campbell and K. L. Keller, Brand familiarity and advertising repetition effects, Journal of Consumer Research, 30 (2003), 292-304.  doi: 10.1086/376800.  Google Scholar

[3]

S. A. Freedman, E. Dayan, Y. B. Kimelman, H. Weissman and R. Eitan, Early intervention for preventing posttraumatic stress disorder: An internet-based virtual reality treatment European Journal of Psychotraumatology, 6 (2015), 25608. doi: 10.3402/ejpt.v6.25608.  Google Scholar

[4]

S. H. Ha, An intelligent system for personalized advertising on the internet, in E-Commerce and Web Technologies, Springer, 2004, 21–30. doi: 10.1007/978-3-540-30077-9_3.  Google Scholar

[5]

P. Kazienko and M. Adamski, Adrosa adaptive personalization of web advertising, Information Sciences, 177 (2007), 2269-2295.  doi: 10.1016/j.ins.2007.01.002.  Google Scholar

[6]

K. Kilic and O. Bozkurt, Computational intelligence based decision support tool for personalized advertisement assignment system, International Journal of Computational Intelligence Systems, 6 (2013), 396-410.  doi: 10.1080/18756891.2013.780725.  Google Scholar

[7]

K. Kilic, M. G. Saygi and S. O. Sezer, A mathematical model for personalized advertisement in virtual reality environments, Mathematical Methods of Operations Research, 85 (2017), 241-264.  doi: 10.1007/s00186-016-0567-8.  Google Scholar

[8]

M. Langheinrich, A. Nakamura, N. Abe, T. Kamba and Y. Koseki, Unintrusive customization techniques for web advertising, Computer Networks, 31 (1999), 1259-1272.  doi: 10.1016/S1389-1286(99)00033-X.  Google Scholar

[9]

A. Marchand and T. Hennig-Thurau, Value creation in the video game industry: Industry economics, consumer benefits, and research opportunities, Journal of Interactive Marketing, 27 (2013), 141-157.   Google Scholar

[10]

J. J. Pan, J. Chang, X. Yang, H. Liang, J. J. Zhang, T. Qureshi, R. Howell and T. Hickish, Virtual reality training and assessment in laparoscopic rectum surgery, The International Journal of Medical Robotics and Computer Assisted Surgery, 11 (2015), 194-209.  doi: 10.1002/rcs.1582.  Google Scholar

[11]

J. E. Phelps, R. Lewis, L. Mobilio, D. Perry and N. Raman, Viral marketing or electronic word-of-mouth advertising: Examining consumer responses and motivations to pass along email, Journal of Advertising Research, 44 (2004), 333-348.  doi: 10.1017/S0021849904040371.  Google Scholar

[12]

S. Schmidt and M. Eisend, Advertising repetition: A meta-analysis on effective frequency in advertising, Journal of Advertising, 44 (2015), 415-428.  doi: 10.1080/00913367.2015.1018460.  Google Scholar

[13]

J. A. Tomlin, An entropy approach to unintrusive targeted advertising on the web, Computer Networks, 33 (2000), 767-774.  doi: 10.1016/S1389-1286(00)00062-1.  Google Scholar

[14]

W. W. Tsang and A. S. Fu, Virtual reality exercise to improve balance control in older adults at risk of falling, Hong Kong Medical Journal, 22 (2016), 19-22.   Google Scholar

[15]

J. Turner, The planning of guaranteed targeted display advertising, Operations Research, 60 (2012), 18-33.  doi: 10.1287/opre.1110.0996.  Google Scholar

[16]

J. Turner, A. Scheller-Wolf and S. Tayur, Or practice-scheduling of dynamic in-game advertising, Operations Research, 59 (2011), 1-16.  doi: 10.1287/opre.1100.0852.  Google Scholar

[17]

I. Yaveroglu and N. Donthu, Advertising repetition and placement issues in on-line environments, Journal of Advertising, 37 (2008), 31-44.  doi: 10.2753/JOA0091-3367370203.  Google Scholar

[18]

ZenithOptimedia, Advertising expenditure forecasts march 2016, https://www.performics.com/executive-summary-advertising-expenditure-forecasts-march-2016/, 2016, Accessed March 28, 2018. Google Scholar

[19]

N. Zhou, Y. Chen and H. Zhang, Study on personalized recommendation model of internet advertisement, in Integration and Innovation Orient to E-Society Volume 2, Springer, 2007, 176–183. doi: 10.1007/978-0-387-75494-9_22.  Google Scholar

show all references

References:
[1]

S. M. Bae, S. C. Park and S. H. Ha, Fuzzy web ad selector based on web usage mining, Intelligent Systems, IEEE, 18 (2003), 62-69.   Google Scholar

[2]

M. C. Campbell and K. L. Keller, Brand familiarity and advertising repetition effects, Journal of Consumer Research, 30 (2003), 292-304.  doi: 10.1086/376800.  Google Scholar

[3]

S. A. Freedman, E. Dayan, Y. B. Kimelman, H. Weissman and R. Eitan, Early intervention for preventing posttraumatic stress disorder: An internet-based virtual reality treatment European Journal of Psychotraumatology, 6 (2015), 25608. doi: 10.3402/ejpt.v6.25608.  Google Scholar

[4]

S. H. Ha, An intelligent system for personalized advertising on the internet, in E-Commerce and Web Technologies, Springer, 2004, 21–30. doi: 10.1007/978-3-540-30077-9_3.  Google Scholar

[5]

P. Kazienko and M. Adamski, Adrosa adaptive personalization of web advertising, Information Sciences, 177 (2007), 2269-2295.  doi: 10.1016/j.ins.2007.01.002.  Google Scholar

[6]

K. Kilic and O. Bozkurt, Computational intelligence based decision support tool for personalized advertisement assignment system, International Journal of Computational Intelligence Systems, 6 (2013), 396-410.  doi: 10.1080/18756891.2013.780725.  Google Scholar

[7]

K. Kilic, M. G. Saygi and S. O. Sezer, A mathematical model for personalized advertisement in virtual reality environments, Mathematical Methods of Operations Research, 85 (2017), 241-264.  doi: 10.1007/s00186-016-0567-8.  Google Scholar

[8]

M. Langheinrich, A. Nakamura, N. Abe, T. Kamba and Y. Koseki, Unintrusive customization techniques for web advertising, Computer Networks, 31 (1999), 1259-1272.  doi: 10.1016/S1389-1286(99)00033-X.  Google Scholar

[9]

A. Marchand and T. Hennig-Thurau, Value creation in the video game industry: Industry economics, consumer benefits, and research opportunities, Journal of Interactive Marketing, 27 (2013), 141-157.   Google Scholar

[10]

J. J. Pan, J. Chang, X. Yang, H. Liang, J. J. Zhang, T. Qureshi, R. Howell and T. Hickish, Virtual reality training and assessment in laparoscopic rectum surgery, The International Journal of Medical Robotics and Computer Assisted Surgery, 11 (2015), 194-209.  doi: 10.1002/rcs.1582.  Google Scholar

[11]

J. E. Phelps, R. Lewis, L. Mobilio, D. Perry and N. Raman, Viral marketing or electronic word-of-mouth advertising: Examining consumer responses and motivations to pass along email, Journal of Advertising Research, 44 (2004), 333-348.  doi: 10.1017/S0021849904040371.  Google Scholar

[12]

S. Schmidt and M. Eisend, Advertising repetition: A meta-analysis on effective frequency in advertising, Journal of Advertising, 44 (2015), 415-428.  doi: 10.1080/00913367.2015.1018460.  Google Scholar

[13]

J. A. Tomlin, An entropy approach to unintrusive targeted advertising on the web, Computer Networks, 33 (2000), 767-774.  doi: 10.1016/S1389-1286(00)00062-1.  Google Scholar

[14]

W. W. Tsang and A. S. Fu, Virtual reality exercise to improve balance control in older adults at risk of falling, Hong Kong Medical Journal, 22 (2016), 19-22.   Google Scholar

[15]

J. Turner, The planning of guaranteed targeted display advertising, Operations Research, 60 (2012), 18-33.  doi: 10.1287/opre.1110.0996.  Google Scholar

[16]

J. Turner, A. Scheller-Wolf and S. Tayur, Or practice-scheduling of dynamic in-game advertising, Operations Research, 59 (2011), 1-16.  doi: 10.1287/opre.1100.0852.  Google Scholar

[17]

I. Yaveroglu and N. Donthu, Advertising repetition and placement issues in on-line environments, Journal of Advertising, 37 (2008), 31-44.  doi: 10.2753/JOA0091-3367370203.  Google Scholar

[18]

ZenithOptimedia, Advertising expenditure forecasts march 2016, https://www.performics.com/executive-summary-advertising-expenditure-forecasts-march-2016/, 2016, Accessed March 28, 2018. Google Scholar

[19]

N. Zhou, Y. Chen and H. Zhang, Study on personalized recommendation model of internet advertisement, in Integration and Innovation Orient to E-Society Volume 2, Springer, 2007, 176–183. doi: 10.1007/978-0-387-75494-9_22.  Google Scholar

Figure 1.  The sample mean revenues of the six algorithms for varying number of replications in Experiment 111
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Figure 2.  Computed expected revenues (ER) and the sample mean revenues (SMR) obtained for various L = 1/h values for the finite difference algorithm in Experiment #111
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Figure 3.  Computed expected revenues determined at each iteration (that is, $n \mapsto U_n$) for the value iteration algorithms with different resolution parameter values in Experiment # 111
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Figure 4.  Computed expected revenues determined by the value iteration algorithm after 40 iterations for different resolution parameter values in Experiment #111
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Figure 5.  The computational time in days for the value iteration algorithm with iteration number = 40, for different resolution parameter values in Experiment 111
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Figure 6.  The expected revenues determined by the value iteration algorithm with iteration number = 40, for different resolution parameter values in Experiment 111
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Figure 7.  The sample mean revenues (SMRs) determined by the finite difference algorithm for different h-value in Experiment 111
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Table 1.  Parameters for numerical experiments
Problem Specific Parameters Algorithm Specific Parameters
Problem Size $h$ value
Initial StatesIteration Number
Transition RatesResolution (i.e., Step Length in Time)
$\beta$-probabilities
Exposure Payment Matrix
Min./Max. Display Constraint
Min./Max. Payment Constraint
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Problem Specific Parameters Algorithm Specific Parameters
Problem Size $h$ value
Initial StatesIteration Number
Transition RatesResolution (i.e., Step Length in Time)
$\beta$-probabilities
Exposure Payment Matrix
Min./Max. Display Constraint
Min./Max. Payment Constraint
Table 2.  Experimental Conditions
Experiment #Maximum DisplayMinimum PaymentMaximum Payment
11151040
11251070
12153040
12253070
21181040
21281070
22183040
22283070
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Experiment #Maximum DisplayMinimum PaymentMaximum Payment
11151040
11251070
12153040
12253070
21181040
21281070
22183040
22283070
Table 3.  Revenue performance of the algorithms for different experimental conditions
HeuristicsFinite DifferenceValue Iteration
Exp.#ABCRandomSMRERSMRER
11132.2545.4642.2428.8345.9345.5745.9044.57
11232.6945.9942.2428.9946.4746.0146.4945.01
12113.2814.869.549.7030.7530.4630.7929.61
12213.8215.409.549.8633.7133.3833.6432.35
21133.8149.5549.1329.7149.6349.2749.6248.16
21235.2849.8549.3430.1149.8949.5549.9148.46
22115.6631.4430.7511.5234.8034.3634.8533.17
22217.0031.7530.9611.9239.9439.9039.9038.55
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HeuristicsFinite DifferenceValue Iteration
Exp.#ABCRandomSMRERSMRER
11132.2545.4642.2428.8345.9345.5745.9044.57
11232.6945.9942.2428.9946.4746.0146.4945.01
12113.2814.869.549.7030.7530.4630.7929.61
12213.8215.409.549.8633.7133.3833.6432.35
21133.8149.5549.1329.7149.6349.2749.6248.16
21235.2849.8549.3430.1149.8949.5549.9148.46
22115.6631.4430.7511.5234.8034.3634.8533.17
22217.0031.7530.9611.9239.9439.9039.9038.55
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