Sellers want maximum exposure to users. With many sellers and only a small number of ads available, the platform has to make smart decisions on which ad to choose for each slot, based on how much each advertiser is willing to spend.

Daily Budget

A daily budget is the dollar amount the advertiser wants to spend on ads each day. This amount is usually represented as an average per day, so the platform can reserve some budget from low-traffic days to spend on high-traffic days. Daily budgets are managed by pacers, described below, which adjust bids to ensure the budget is spread out over time.

Pacing

A pacer is an Auto-Bidder that adjusts insertion bids of an ad over time to account for opportunity costs given a limited budget for delivery from the advertiser. This budgeting is typically implemented as a target “opportunity curve” of expected cumulative allocation opportunities per day. A pacer tries to spend the daily budget slowly and optimally to track this opportunity curve. Promoted uses two types of pacers:

• Probabilistic pacer. The auto-bidder drops out of auctions at a certain probability.
• Discount pacer. The bid multiplier is continuously adjusted, usually using a PID controller. The bid is changed on a per-auction basis using a real-time feedback loop, comparing ad spending to projected ad opportunities.

Opportunity curve

Ads pacing compares the actual cumulative delivery (as a percentage of the target) to an expected cumulative delivery (as a percentage of the target) within a fixed period, such as 24 hours. The opportunity curve is the expected cumulative spend in time.

A simple solution is to spend the budget equally throughout the day. In other words, the expected spend is 0% at 00:00 UTC, 50% at 12:00 UTC, and 100% at 24:00 UTC, then resetting back to 0%. In practice, the curve should optimally track expected clicks and impressions in the appropriate time zone to proportionally distribute the budget. This ensures the budget isn't being overspent at times user engagement is low.

Strategies

In implementing Promoted's pacing strategies, Promoted combines two competing concepts: positive and negative pacing.

• Negative pacing. This technique restricts delivery to limit costs to the seller. Sellers may only have a limited budget, which means there is value in losing an ads auction.
• Positive pacing. This technique boosts delivery to limit costs to the marketplace. It is an efficient way to explore new items or guarantee a minimum seller experience.

Positive and negative pacing can be combined to enforce upper or lower bounds in delivery.

Negative Pacing

Ideally, advertisers want only profitable ad opportunities (i.e., leading to impressions or conversions) to be delivered. If a seller has a limited budget, then they want to prioritize the most profitable opportunities. However, opportunities happen in time, and the system doesn't know when the profitable opportunities will occur. If the budget is spent too early, better opportunities in the future may be missed.

A negative pacer estimates the value of losing a given auction. This value depends on how many expected better opportunities remain in the day and how much budget the advertiser will have (by either winning or losing) to try to win those opportunities.

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Unlimited budgets may still need negative pacing

In theory, if an advertiser has an unlimited budget and can win every auction, then the value of losing is usually zero. However, if there are other delivery constraints, like repetition limits, there may be value in losing an auction even with an unlimited budget.

Positive Pacing

Ads and promotions are not necessarily without consequence to the marketplace — each ad delivered may contribute to a worse experience for the user. However, ads may contribute in positive ways:

• Achieving a minimum value delivered for every seller
• Increasing exploration and diversity
• Serving as a "cold start" to promote new sellers

In these cases, it is important to boost delivery while minimizing loss. If minimum delivery is already achieved or is projected to be achieved, then no boosting is necessary.