Correspondence: Changhyun Kwon, Department of Industrial and Systems Engineering, University at Buffalo, the State University of New York, 400 Bell Hall, Buffalo, NY 14260, USA. E-mail: chkwon@buffalo.edu

¹is an assistant professor in the Department of Industrial and Systems Engineering at the University at Buffalo, the State University of New York. He obtained a PhD in Industrial Engineering in 2008 and an MS in Industrial Engineering and Operations Research in 2005, both from the Pennsylvania State University. He also received a BS in Mechanical Engineering from the Korea Advanced Institute of Science and Technology in 2000. His research interests are dynamic pricing, revenue management, transportation, traffic theory and optimization theory.

Received 12 August 2009; Revised 12 August 2009; Published online 6 November 2009.

Abstract

In this article, we study a balancing problem of web publishers for pay-per-view and pay-per-click contracts for online display advertising. Considering the details of contracts, we refine prior research results on the recommendation of optimal strategies. We examine the problem by formalizing a simple stochastic optimization problem for a single period of advertising contracts. We investigate how pricing and other contract components will affect the optimal display strategies analytically and numerically.