Jun Wang
Bowei Chen
ABSTRACT
Many online advertising slots are sold through bidding mechanisms by publishers and search engines. Highly affected by the dual force of supply and demand, the prices of advertising slots vary significantly over time. This then influences the businesses whose major revenues are driven by online advertising, particularly for publishers and search engines. To address the problem, we propose to sell the future advertising slots via option contracts (also called ad options). The ad option can give its buyer the right to buy the future advertising slots at a prefixed price. The pricing model of ad options is developed in order to reduce the volatility of the income of publishers or search engines. Our experimental results confirm the validity of ad options and the embedded risk management mechanisms.
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Index Terms
- Selling futures online advertising slots via option contracts
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