Seminal Work

This chapter covers the foundational research and industry developments that have shaped modern advertising systems.

The Evolution of Online Advertising

Online advertising has evolved dramatically from simple banner ads to sophisticated ML-powered systems:

Early Web (1990s-2000s): Static banner ads, simple targeting
Search Advertising (2000s): Keyword-based auctions, pay-per-click models
Programmatic Era (2010s): Real-time bidding, automated ad exchanges
ML-Powered Systems (2010s-present): Deep learning for prediction, sophisticated ranking

Key Papers and Foundational Concepts

Auction Theory Foundations

Vickrey's Second-Price Auction - The theoretical foundation for truthful bidding
Generalized Second-Price (GSP) - The mechanism used by Google AdWords
VCG Auctions - The theoretically optimal mechanism for multi-item auctions

Machine Learning for Advertising

Click-Through Rate Prediction - Wide & Deep, DeepFM, and related architectures
Real-Time Bidding Systems - Systems for programmatic advertising
Multi-Armed Bandits - Exploration-exploitation tradeoffs in ad serving

Industry Case Studies

Google AdWords architecture and evolution
Facebook's ad ranking system
Amazon's sponsored products

From Simple Banner Ads to ML-Powered Systems

The journey from static banner ads to today's ML-powered systems represents one of the most significant technical transformations in online commerce. Understanding this evolution helps contextualize the design decisions we'll explore throughout this book.

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