Bid Increment Adjusting Strategies in English Auction-based Sponsored Search

Abstract

Abstract:English auctions are applied in many current e-commerce applications because of the easy implementation. Some sponsored search advertising (SSA) services consider the ascending bidding rules of English auctions to determine winners. However, the high computation cost of determining winners is the major drawback of the English auction-based SSAs. Because the SSA is an online service, Internet users do not wait for a long time to receive the search result pages. In this paper, we provide a mechanism to reduce the overhead of computing winners and maximize the revenue obtained by the search engine provider (SEP). Our proposed mechanism adopts the minimum increase price (MIP), which is similar to the central price in the English auction, to indicate how much should be raised for the bids with updated prices. We design a uniform MIP adjusting strategy and an adaptive MIP adjusting strategy to determine the MIP setting in each round. We analyze the convergent speed of two proposed MIP adjusting strategies. According to our simulation results, we conclude the following properties. For all the SEP revenue considerations, the adaptive MIP adjusting strategy is outstanding in popular keywords, and rare keywords for the uniform MIP adjusting strategy. Opposite results are obtained for the convergent speed.