Harikesh S. Nair

Wenjia Ba, J. Michael Harrison, Harikesh S. Nair

We present a data-driven algorithm that advertisers can use to automate their digital ad-campaigns at online publishers. The algorithm enables the advertiser to search across available target audiences and ad-media to find the best possible combination for its campaign via online experimentation. The problem of finding the best audience-ad combination is complicated by a number of distinctive challenges, including (a) a need for active exploration to resolve prior uncertainty and to speed the search for profitable combinations, (b) many combinations to choose from, giving rise to high-dimensional search formulations, and (c) very low success probabilities, typically just a fraction of one percent. Our algorithm (designated LRDL, an acronym for Logistic Regression with Debiased Lasso) addresses these challenges by combining four elements: a multiarmed bandit framework for active exploration; a Lasso penalty function to handle high dimensionality; an inbuilt debiasing kernel that handles the regularization bias induced by the Lasso; and a semi-parametric regression model for outcomes that promotes cross-learning across arms. The algorithm is implemented as a Thompson Sampler, and to the best of our knowledge, it is the first that can practically address all of the challenges above. Simulations with real and synthetic data show the method is effective and document its superior performance against several benchmarks from the recent high-dimensional bandit literature.

Carlos Carrion, Zenan Wang, Harikesh Nair et al.

In e-commerce platforms, sponsored and non-sponsored content are jointly displayed to users and both may interactively influence their engagement behavior. The former content helps advertisers achieve their marketing goals and provides a stream of ad revenue to the platform. The latter content contributes to users' engagement with the platform, which is key to its long-term health. A burning issue for e-commerce platform design is how to blend advertising with content in a way that respects these interactions and balances these multiple business objectives. This paper describes a system developed for this purpose in the context of blending personalized sponsored content with non-sponsored content on the product detail pages of JD.COM, an e-commerce company. This system has three key features: (1) Optimization of multiple competing business objectives through a new virtual bids approach and the expressiveness of the latent, implicit valuation of the platform for the multiple objectives via these virtual bids. (2) Modeling of users' click behavior as a function of their characteristics, the individual characteristics of each sponsored content and the influence exerted by other sponsored and non-sponsored content displayed alongside through a deep learning approach; (3) Consideration of externalities in the allocation of ads, thereby making it directly compatible with a Vickrey-Clarke-Groves (VCG) auction scheme for the computation of payments in the presence of these externalities. The system is currently deployed and serving all traffic through JD.COM's mobile application. Experiments demonstrating the performance and advantages of the system are presented.

Tong Geng, Xiliang Lin, Harikesh S. Nair et al.

Comparison Lift is an experimentation-as-a-service (EaaS) application for testing online advertising audiences and creatives at JD.com. Unlike many other EaaS tools that focus primarily on fixed sample A/B testing, Comparison Lift deploys a custom bandit-based experimentation algorithm. The advantages of the bandit-based approach are two-fold. First, it aligns the randomization induced in the test with the advertiser's goals from testing. Second, by adapting experimental design to information acquired during the test, it reduces substantially the cost of experimentation to the advertiser. Since launch in May 2019, Comparison Lift has been utilized in over 1,500 experiments. We estimate that utilization of the product has helped increase click-through rates of participating advertising campaigns by 46% on average. We estimate that the adaptive design in the product has generated 27% more clicks on average during testing compared to a fixed sample A/B design. Both suggest significant value generation and cost savings to advertisers from the product.

Caio Waisman, Harikesh S. Nair, Carlos Carrion

Real-time bidding (RTB) systems, which utilize auctions to allocate user impressions to competing advertisers, continue to enjoy success in digital advertising. Assessing the effectiveness of such advertising remains a challenge in research and practice. This paper proposes a new approach to perform causal inference on advertising bought through such mechanisms. Leveraging the economic structure of first- and second-price auctions, we first show that the effects of advertising are identified by the optimal bids. Hence, since these optimal bids are the only objects that need to be recovered, we introduce an adapted Thompson sampling (TS) algorithm to solve a multi-armed bandit problem that succeeds in recovering such bids and, consequently, the effects of advertising while minimizing the costs of experimentation. We derive a regret bound for our algorithm which is order optimal and use data from RTB auctions to show that it outperforms commonly used methods that estimate the effects of advertising.

Tong Geng, Xiliang Lin, Harikesh S. Nair

Firms implementing digital advertising campaigns face a complex problem in determining the right match between their advertising creatives and target audiences. Typical solutions to the problem have leveraged non-experimental methods, or used "split-testing" strategies that have not explicitly addressed the complexities induced by targeted audiences that can potentially overlap with one another. This paper presents an adaptive algorithm that addresses the problem via online experimentation. The algorithm is set up as a contextual bandit and addresses the overlap issue by partitioning the target audiences into disjoint, non-overlapping sub-populations. It learns an optimal creative display policy in the disjoint space, while assessing in parallel which creative has the best match in the space of possibly overlapping target audiences. Experiments show that the proposed method is more efficient compared to naive "split-testing" or non-adaptive "A/B/n" testing based methods. We also describe a testing product we built that uses the algorithm. The product is currently deployed on the advertising platform of JD.com, an eCommerce company and a publisher of digital ads in China.

Ruihuan Du, Yu Zhong, Harikesh Nair et al.

This paper describes a practical system for Multi Touch Attribution (MTA) for use by a publisher of digital ads. We developed this system for JD.com, an eCommerce company, which is also a publisher of digital ads in China. The approach has two steps. The first step ('response modeling') fits a user-level model for purchase of a product as a function of the user's exposure to ads. The second ('credit allocation') uses the fitted model to allocate the incremental part of the observed purchase due to advertising, to the ads the user is exposed to over the previous T days. To implement step one, we train a Recurrent Neural Network (RNN) on user-level conversion and exposure data. The RNN has the advantage of flexibly handling the sequential dependence in the data in a semi-parametric way. The specific RNN formulation we implement captures the impact of advertising intensity, timing, competition, and user-heterogeneity, which are known to be relevant to ad-response. To implement step two, we compute Shapley Values, which have the advantage of having axiomatic foundations and satisfying fairness considerations. The specific formulation of the Shapley Value we implement respects incrementality by allocating the overall incremental improvement in conversion to the exposed ads, while handling the sequence-dependence of exposures on the observed outcomes. The system is under production at JD.com, and scales to handle the high dimensionality of the problem on the platform (attribution of the orders of about 300M users, for roughly 160K brands, across 200+ ad-types, served about 80B ad-impressions over a typical 15-day period).