Tutorial T6-A - Online advertising: business models, technologies and issues

James Shanahan, Church and Duncan Group Inc.


Internet advertising revenues in the United States totaled $21 billion for 2007, up 25 percent versus 2006 revenues of $16.9 billion (according to the Interactive Advertising Bureau). Fueled by these growth rates and the desire to provide added incentives and opportunities for both advertisers and publishers, alternative business models to online advertising are been developed. This tutorial will review the main business models of online advertising including: the pay-per-impression model (CPM); and the pay-per-click model (CPC); a relative new comer, the pay-per-action model (CPA), where an action could be a product purchase, a site visit, a customer lead, or an email signup; and dynamic CPM (dCPM) which optimizes a campaign towards the sites and site sections that perform best for the advertiser.

This tutorial will also discuss in detail the technology being leveraged to automatically target ads within these business models; this largely derives from the fields of machine learning (e.g., logistic regression, online learning), statistical (e.g., binomial maximum likelihood), information retrieval (vector space model, BM25) and economics (auction mechanisms, game theory). Challenges such as click fraud (the spam of online advertising), deception, privacy and other open issues will also be discussed. Web 2.0 applications such as social networks, and video/photo-sharing pose new challenges for online advertising. These will also be discussed.


Dr. James G. Shanahan has spent the last 20 years developing and researching cutting-edge information management systems to harness information retrieval, linguistics and machine learning. During the summer of 2007, he started a boutique consultancy (Church and Duncan Group Inc.) in San Francisco who major goal is to help companies leverage their vast repositories of data using statistics, machine learning and data mining for applications are such as web search, and online advertising. Church and Duncan Group’s clients include SearchMe.com, MyOfferPal.com, SkyGrid.com, and ScoutLabs.com.

Prior to starting Church and Duncan Group Inc., Jimi was Chief Scientist (and member of executive team) at Turn Inc. where he focused on the development and deployment of an online ad targeting system (CPA/CPC/CPM-based) in a principled and measured way that leveraged advanced statistical and machine learning techniques; These responsibilities included leveraging the entire reservoir of data assets in order to develop methods for identifying key optimizations, deploying relevant analytical tools and improving the user experience. Prior to joining Turn, Jimi was Principal Research Scientist at Clairvoyance Corporation where he led the Knowledge Discovery from Text Group. Before that he was a Research Scientist at Xerox Research Center Europe (XRCE), where, as a member of the Co-ordination Technologies Group, he developed Document Souls, a patented document-centric approach to information access. In the early 90s, he worked on the AI Team within the Mitsubishi Group in Tokyo.

He has published six books, over 50 research publications, and 15 patents in the areas of machine learning and information processing. Jimi was General Chair for CIKM 2008. He is a regularly invited to give talks at international conferences and universities around the world. Jimi received his Ph.D. in engineering mathematics from the University of Bristol, U. K. and holds a bachelor of science degree in computer science from the University of Limerick, Ireland. He is a Marie Curie fellow and member of IEEE and ACM.