Design Ad Click Prediction

1. Frame the Problem: A Prediction With a Price Tag

"Design the ads system" is the same funnel again, but with the strictest requirements you will see in this whole family of designs. Here is why: every single prediction gets converted straight into money.

When a page loads, an auction runs among the eligible ads. The winner is whichever ad has the highest expected value, which is roughly bid times the predicted probability of a click. That predicted probability has a name you will use constantly in this lesson: pCTR, short for predicted click-through rate