Graph Theory for Online Advertising

J. Tipan Verella

March 19, 2014

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Introduction

What is so great about Graphs?

A Graph G = (V ; E ) is a pair of sets, vertices and edges.

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Introduction

What is so great about Graphs?

A Graph G = (V ; E ) is a pair of sets, vertices and edges. Degree of Vertex, Connected Components

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Introduction

What is so great about Graphs?

A Graph G = (V ; E ) is a pair of sets, vertices and edges. Degree of Vertex, Connected Components Systems Engineering for Complex Behavioral Systems
bio-chemical reaction networks, ecological systems, distributed adaptive systems; self-organization, phase transition markets, herd behavior and crowdsourcing, bittorrent

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Introduction

What is so great about Graphs?

A Graph G = (V ; E ) is a pair of sets, vertices and edges. Degree of Vertex, Connected Components Systems Engineering for Complex Behavioral Systems
bio-chemical reaction networks, ecological systems, distributed adaptive systems; self-organization, phase transition markets, herd behavior and crowdsourcing, bittorrent

Graphs (Networks) are a versatile tool for understanding structures of Complex Systems.

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Introduction

What is so great about Graphs?

A Graph G = (V ; E ) is a pair of sets, vertices and edges. Degree of Vertex, Connected Components Systems Engineering for Complex Behavioral Systems
bio-chemical reaction networks, ecological systems, distributed adaptive systems; self-organization, phase transition markets, herd behavior and crowdsourcing, bittorrent

Graphs (Networks) are a versatile tool for understanding structures of Complex Systems. What does it have to do with online advertising?

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Introduction

Anecdotes from the Industry

https://www.facebook.com/notes/facebook-engineering/scaling-apache-giraph-toa-trillion-edges/10151617006153920 2 http://research.microsoft.com/en-us/projects/ldg/ 3 https://giraph.apache.org/ 4 http://dl.acm.org/citation.cfm?id=1807184

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Introduction

Anecdotes from the Industry

Facebook Presto 2013, Demonstrating the Scalability of Presto1

https://www.facebook.com/notes/facebook-engineering/scaling-apache-giraph-toa-trillion-edges/10151617006153920 2 http://research.microsoft.com/en-us/projects/ldg/ 3 https://giraph.apache.org/ 4 http://dl.acm.org/citation.cfm?id=1807184

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Introduction

Anecdotes from the Industry

Facebook Presto 2013, Demonstrating the Scalability of Presto1 Microsoft Horton (2012) is a research project in the eXtreme Computing Group to enable querying large distributed graphs.2

https://www.facebook.com/notes/facebook-engineering/scaling-apache-giraph-toa-trillion-edges/10151617006153920 2 http://research.microsoft.com/en-us/projects/ldg/ 3 https://giraph.apache.org/ 4 http://dl.acm.org/citation.cfm?id=1807184

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Introduction

Anecdotes from the Industry

Facebook Presto 2013, Demonstrating the Scalability of Presto1 Microsoft Horton (2012) is a research project in the eXtreme Computing Group to enable querying large distributed graphs.2 Yahoo! Apache Giraph (2011) is an iterative graph processing system built for high scalability.3

https://www.facebook.com/notes/facebook-engineering/scaling-apache-giraph-toa-trillion-edges/10151617006153920 2 http://research.microsoft.com/en-us/projects/ldg/ 3 https://giraph.apache.org/ 4 http://dl.acm.org/citation.cfm?id=1807184

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Introduction

Anecdotes from the Industry

Facebook Presto 2013, Demonstrating the Scalability of Presto1 Microsoft Horton (2012) is a research project in the eXtreme Computing Group to enable querying large distributed graphs.2 Yahoo! Apache Giraph (2011) is an iterative graph processing system built for high scalability.3 Google Pregel (2010) A System for Large-Scale Graph Processing4 Inspired by Leslie Valiants Bulk Synchronous Parallel model for distributed computing.
https://www.facebook.com/notes/facebook-engineering/scaling-apache-giraph-toa-trillion-edges/10151617006153920 2 http://research.microsoft.com/en-us/projects/ldg/ 3 https://giraph.apache.org/ 4 http://dl.acm.org/citation.cfm?id=1807184
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Strategy and Structure

Optimization Problems in Online Performance Advertising

Performance Advertising

Advertiser would prefer to only pay for actions Publisher would prefer to only charge on views (impressions)

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Advertiser Problem

j Nj ( j ) j

is the proportion of your budget you spend on site j are the impressions procured by spending is the conversion rate of your ad on site j

on site j

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Advertiser Problem

j Nj ( j ) j

is the proportion of your budget you spend on site j are the impressions procured by spending is the conversion rate of your ad on site j max Nj ( j ) j
Actionsj

on site j

j 2J

sub ject to:

j  Budget
j

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Publisher Problem

(i ; n) i ;n

is the revenue if impression n is awarded to advertiser i is 1 or 0 depending on whether or not impression n is awarded to advertiser i

I is the set of advertisers

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Publisher Problem

(i ; n) i ;n

is the revenue if impression n is awarded to advertiser i is 1 or 0 depending on whether or not impression n is awarded to advertiser i

I is the set of advertisers

max i n
;

n 2 N i 2I

(i ; n) i ;n
sub ject to:

i 2I

i ;n  1

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The AdNetwork Problem

i ;j i ;j  (i )
cj Bi Nj is the fraction of the inventory on site j allocated to advertiser i are the total number of impressions from site j is the conversion rate of advertiser i on site j is the amount paid per conversion by advertiser i is the cost per impression on site j is the budget of advertiser i

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The AdNetwork Problem

i ;j i ;j  (i )
cj Bi Nj is the fraction of the inventory on site j allocated to advertiser i are the total number of impressions from site j is the conversion rate of advertiser i on site j is the amount paid per conversion by advertiser i is the cost per impression on site j is the budget of advertiser i

max 
sub ject to:

i 2 I j 2J j 2J i 2I

0 B @i ;j

cost

Nj

i ;j (i ) cj
8

1 C Nj A
I

revenue

i ;j Nj i ;j (i )  Bi i ;j  1
8

J
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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Centralized Approach: Linear Programming

max 
sub ject to:

i 2 I j 2J j 2J

0 B @i ;j

cost

Nj

i ;j (i ) cj
8

1 C Nj A
I

revenue

i ;j Nj i ;j (i )  Bi
spend of advertiser i

i 2I

i ;j  1

Plan, Evaluate, Update Duality can says a lot about the structure of your problem

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Centralized Approach: Linear Programming

max 
sub ject to:

i 2 I j 2J j 2J

0 B @i ;j

cost

Nj

i ;j (i ) cj
8

1 C Nj A
I

revenue

i ;j Nj i ;j (i )  Bi
spend of advertiser i

i 2I

i ;j  1

Plan, Evaluate, Update Duality can says a lot about the structure of your problem DOES NOT SCALE!
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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Decentralized Approach: The Market Paradigm

Publisher runs auctions, the good (impressions) goes to the agent that values it the most 5 the monopoly should provide as detailed a description of the good as possible the auction solves the allocation problem Advertiser places bids, 2nd price auction it is optimal to bid your valuation valuation depends on conversion rates, a priori unknown! the number of auctions is also unknown!

Hal Varian on the Online Ad Auction

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Decentralized Approach: The Market Paradigm

Publisher runs auctions, the good (impressions) goes to the agent that values it the most 5 the monopoly should provide as detailed a description of the good as possible the auction solves the allocation problem Advertiser places bids, 2nd price auction it is optimal to bid your valuation valuation depends on conversion rates, a priori unknown! the number of auctions is also unknown! performance rates have to be estimated control algorithms have to be implemented in order to pace the delivery of the ad campaign
5

Hal Varian on the Online Ad Auction

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Strategy and Structure

Optimization Problems in Online Performance Advertising

The Decentralized Approach: The Market Paradigm

Publisher runs auctions, the good (impressions) goes to the agent that values it the most 5 the monopoly should provide as detailed a description of the good as possible the auction solves the allocation problem Advertiser places bids, 2nd price auction it is optimal to bid your valuation valuation depends on conversion rates, a priori unknown! the number of auctions is also unknown! performance rates have to be estimated control algorithms have to be implemented in order to pace the delivery of the ad campaign Markets are complex systems!
5

Hal Varian on the Online Ad Auction

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Strategy and Structure

Graphs and Behavior

More About Graphs: Random Graphs

For each pair of vertices (u ; v ), with u ; v 2 V , we decide to put the edge (u ; v ) based on the outcome of a coin ip, with probability c p=n .

Let V be a vertex set, with |V | = n.

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Strategy and Structure

Graphs and Behavior

Erd os and R enyi

Paul Erd os and Alfred R enyi6 proved (1960) that such a graph experience a phase transition at c = 1.

On the Evolution of Random Graphs

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Strategy and Structure

Graphs and Behavior

Erd os and R enyi

Paul Erd os and Alfred R enyi6 proved (1960) that such a graph experience a phase transition at c = 1.
Figure : as c goes from

< 1 to > 1

On the Evolution of Random Graphs

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Strategy and Structure

Graphs and Behavior

Erd os and R enyi

Paul Erd os and Alfred R enyi6 proved (1960) that such a graph experience a phase transition at c = 1.
Figure : as c goes from

< 1 to > 1

On the Evolution of Random Graphs

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Strategy and Structure

Graphs and Behavior

Erd os and R enyi

Paul Erd os and Alfred R enyi6 proved (1960) that such a graph experience a phase transition at c = 1.
Figure : as c goes from

< 1 to > 1

On the Evolution of Random Graphs

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Strategy and Structure

Graphs and Behavior

Erd os and R enyi

Paul Erd os and Alfred R enyi6 proved (1960) that such a graph experience a phase transition at c = 1.
Figure : as c goes from

< 1 to > 1

On the Evolution of Random Graphs

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Strategy and Structure

Graphs and Behavior

Local Interactions in the Quantitative Social Sciences

Sociologist, Mark Granovetter: The Strength of Weak Ties (1973) Economists: predictive power of social interactions
Lawrence Blumef (1993), propose using model from statistical mechanics to understand strategic interactions Edward Gleaser EtAl 1996, Crime and Social Interactions Steven Durlauf (1999) asks in PNAS, How can statistical mechanics contribute to social science? H. Peyton Young 2001, Individual Strategy and Social Structure: An Evolutionary Theory of Institutions

7 8

responsdent driven sampling Social Networks and Gang Violence

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Strategy and Structure

Graphs and Behavior

Local Interactions in the Quantitative Social Sciences

Sociologist, Mark Granovetter: The Strength of Weak Ties (1973) Economists: predictive power of social interactions
Lawrence Blumef (1993), propose using model from statistical mechanics to understand strategic interactions Edward Gleaser EtAl 1996, Crime and Social Interactions Steven Durlauf (1999) asks in PNAS, How can statistical mechanics contribute to social science? H. Peyton Young 2001, Individual Strategy and Social Structure: An Evolutionary Theory of Institutions

by 1996, Social Network Analysis: Methods and Applications by Faust and Wasserman. More recently sociolgists at Cornell University have been using graph based sampling methods 7 to do estimations for hidden populations sociologists like A.V. Papachristos have been using social networks to understand the crime in Chicago8 .
7 8

responsdent driven sampling Social Networks and Gang Violence

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Scale and Complexity

The Web is a Network! ...Bipartite Graphs Everywhere!

CrowdSourcing: Power to the People!

Yochai Benkler on Directories and GooglePageRank channels/categories/directories, advertisers/campaigns/creatives

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Scale and Complexity

The Web is a Network! ...Bipartite Graphs Everywhere!

Site Networks and Audiences

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Scale and Complexity

The Web is a Network! ...Bipartite Graphs Everywhere!

Site Networks and Audiences

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Scale and Complexity

The Web is a Network! ...Bipartite Graphs Everywhere!

Community Detection

Why understand community structures of complex networks? Size, problem reduction Topology, diverse degree distribution

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Scale and Complexity

The Web is a Network! ...Bipartite Graphs Everywhere!

Community Detection

Why understand community structures of complex networks? Size, problem reduction Topology, diverse degree distribution Biological Sciences Perspective: network enables the discovery of organization interactions of a bio-chemical system Complex Networks as backbone of Complex Systems Communities enable decomposition into subsystems, modules

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Scale and Complexity

The Web is a Network! ...Bipartite Graphs Everywhere!

Community Detection

Why understand community structures of complex networks? Size, problem reduction Topology, diverse degree distribution Biological Sciences Perspective: network enables the discovery of organization interactions of a bio-chemical system Complex Networks as backbone of Complex Systems Communities enable decomposition into subsystems, modules

In online advertising: Feature Extraction!

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Scale and Complexity

The Web is a Network! ...Bipartite Graphs Everywhere!

The Pinned Random Walk

Denition (PRW) = (V ; E ) be a connected undirected graph. Let P be the transition Eij probability matrix induced by the incidence matrix, Pij = . Let 0 j Eij be a probability measure on V and  2 (0; 1). We call an pinned random walk the discrete time stochastic process, Xk , on G that changes measures k on V according to: Let
G

X0 = x0 ;

almost surely

k = k 1 P + (1 )0

(1)

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Conclusion

So . . . What is so great about Networks?

Coming out of the woodworks of the systems you deal with within online advertising, because your systems are Complex! They are the underlying structures of you advertising systems They are predictive! Statisticians are actively working on tools to extract information from those rich strutures.

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Conclusion

Thank You!

Millennial Media Rosalee MacKinnon

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Conclusion

Thank You!

Millennial Media Rosalee MacKinnon Rick Daggett

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Conclusion

Thank You!

Millennial Media Rosalee MacKinnon Rick Daggett Dr. Jean M. Grow

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