IEEE TRANSACTIONS ON SYSTEMS, MAN, AND CYBERNETICS—PART A: SYSTEMS AND HUMANS, VOL. 36, NO. 2, MARCH 2006 245 Scheduling Web Banner Advertisements With Multiple Display Frequencies Ali Amiri, Member, IEEE, and Syam Menon, Member, IEEE Abstract—Online advertising continues to be a significant source of income for many Internet-based organizations. Re- cent indications of improved economic growth are having an impact on advertisement revenue, with the estimated online advertising revenue in the United States for the fourth quarter of 2003 totaling a record of $2.2 billion. A substantial portion of this income comes from banner advertisements, and efficient schedul- ing of these advertisements could result in a considerable increase in profits. The problem of scheduling banner advertisements has been observed to be intractable via traditional optimization tech- niques and has received only limited attention in the literature. In addition, all past attempts to address this problem have been based on an “all-or-nothing” framework, where a customer specifies the exact number of copies of the ad to be displayed over the planning horizon, if it is selected for display by the provider of the advertisement space. This paper extends it to a more realistic setting, where the customer is allowed to specify a set of acceptable display frequencies. The Lagrangian decomposition-based solu- tion approaches presented in this paper are observed to provide good schedules in a reasonable period of time. Index Terms—Banner advertising, multifrequency, sched- uling, WWW. I. I NTRODUCTION A CCORDING to the Internet Ad Revenue Report [12] from the Interactive Advertising Bureau (IAB), Internet advertising revenue for the United States will be around $2.2 billion for the fourth quarter of 2003 alone. For many web- based organizations, revenue from advertisements is often the only source of income (e.g., Yahoo.com, AltaVista.com). The report also notes that approximately 23% of the advertisements viewed were in banner form. Buchwalter et al. [4] mention that 99% of all web sites offer standard banner advertisements, underlining the importance of this form of online advertising. Under these conditions, it is reasonable to expect that there are potentially significant gains to be made by scheduling banner advertisements efficiently. A banner ad is essentially a hypertext link that is associated with a box containing graphics that instructs a web server to bring up a particular web page when a user clicks on the banner. Unlike a traditional print advertisement, it has the ability to bring a potential customer directly to the advertiser’s website. Another critical difference involves the ability to dynamically Manuscript received March 6, 2004; revised February 13, 2004. This paper was recommended by Associate Editor J. Miller. A. Amiri is with the College of Business Administration, Oklahoma State University, Stillwater, OK 74078 USA (e-mail: amiri@okstate.edu). S. Menon is with the School of Management, The University of Texas at Dallas, Richardson, TX 75083 USA (e-mail: syam@utdallas.edu). Digital Object Identifier 10.1109/TSMCA.2005.855918 alter the advertisements presented. Banner ads come in a variety of shapes and sizes. The IAB specifies 14 different banner sizes, according to pixel dimensions, with the full banner (468 × 60) being the most popular. While these are not the only sizes being used, they are a good representation of the range of common banner ads available. An advertiser interested in posting banner ads can: 1) arrange to display other web sites’ banner ads in exchange for them displaying its ad; 2) pay publisher sites to post their banner; or 3) pay a banner ad network like DoubleClick.com to post the banner on a variety of publisher sites. As already men- tioned, selling banner advertising space is a common approach to generate revenue. The seller can either try to market the space on their own, or join a banner ad network, which will recruit advertisers, keep track of earnings, and control banner ad placement on the seller’s site. The most commonly used pricing scheme is the cost-per- thousand-impressions (CPM) model, where the cost is asso- ciated with the number of exposures of the advertisement. Variants that are in use include the cost-per-click (CPC) model, where the advertiser pays the publisher each time the banner is clicked on, the cost-per-event (CPE) model, where the adver- tiser pays the publisher each time a desired event (like a sale) occurs, and various hybrid pricing schemes. The procedure developed in this model is applicable primarily to the CPM pricing model, which is the most widely used model in practice. According to the IAB, the prevalent pricing model was the straight CPM model, which accounted for 45% of all such advertisements in the second quarter of 2003. Many advertisements compete for space on a given web page in any given scheduling horizon. Ads are updated at regular intervals of time and a rectangular slot with advertisements is displayed in each interval. As a result, each of these time intervals represents decisions to be made regarding which advertisements to present to the viewer of the site. The single-frequency ad placement problem was introduced in [1] and addressed further in [13] and [14]. In each of these papers, the customers were allowed to specify the number of copies of an advertisement to be placed (the frequency) and all selected advertisements had to be run exactly that number of times. The authors extend this problem to allow the customers to specify a list of acceptable frequencies for advertisements. This arrangement increases the chances of an advertisement getting displayed, thereby benefiting the customer; it also en- ables better “packings” of the advertisements in the banners, resulting in better overall space utilization and increased rev- enue for the supplier of the advertising space. In addition, it allows for the effective implementation of volume discounts. 1083-4427/$20.00 © 2006 IEEE