A LSTM-Hawkes hybrid model for posterior click distribution forecast in the advertising network environment

In the field of advertising technology, it is a key task to forecast posterior click distribution since 66% of advertising transactions depend on cost per click model. However, due to the General Data Protection Regulation, machine learning techniques to forecast posterior click distribution based on the sequences of an identified user’s actions are restricted in European countries. To overcome this barrier, we introduce a contextual behavior concept for the advertising network environment and propose a new hybrid model, which we call the Long Short Term Memory—Hawkes model by combining a stochastic-based generative model and a machine learning-based predictive model. Also, to meet the computational efficiency for the heavy demand in mobile advertisement market, we define gradient exponential kernel with just three hyper parameters to minimize residuals. We have carefully tested our proposed model with production data and found that the LSTM-Hawkes model reduces the Mean Squared Error by at least 27.1% and up to 83.8% on average in comparison to the existing Hawkes Process based algorithm, Hawkes Intensity Process, as well as 39.77% on average in comparison to Multivariate Linear Regression. We have also found that our proposed model improves the forecast accuracy by about 21.2% on average.