Marketing Agencies and Collusive Bidding in Online Ad Auctions

Decarolis, Francesco; Goldmanis, Māris; Penta, Antonio

doi:10.3386/w23962

Cited by 16 publications

(14 citation statements)

References 13 publications

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“…Mansour et al [68], for example, pointed at the potential risk of collusive bidding that intermediaries pose for online ad auctions, and focused on the ad exchanges used for sponsored ads. Decarolis et al [23] studied agency bidding in both the GSP and VCG auctions, allowing for the co-presence of collusive and competitive bidders. The earlier literature on "bidding rings" mostly focused on single-unit mechanisms in which either non-cooperative behavior is straightforward [66], or assuming that the coalition includes all bidders [41,74].…”

Section: Coordinated and Collusivementioning

confidence: 99%

A Price-per-attention Auction Scheme Using Mouse Cursor Information

Arapakis

Penta

Joho

et al. 2020

ACM Trans. Inf. Syst.

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Payments in online ad auctions are typically derived from click-through rates, so that advertisers do not pay for ineffective ads. But advertisers often care about more than just clicks. That is, for example, if they aim to raise brand awareness or visibility. There is thus an opportunity to devise a more effective ad pricing paradigm, in which ads are paid only if they are actually noticed. This article contributes a novel auction format based on a pay-per-attention (PPA) scheme. We show that the PPA auction inherits the desirable properties (strategy-proofness and efficiency) as its pay-per-impression and pay-per-click counterparts, and that it also compares favourably in terms of revenues. To make the PPA format feasible, we also contribute a scalable diagnostic technology to predict user attention to ads in sponsored search using raw mouse cursor coordinates only, regardless of the page content and structure. We use the user attention predictions in numerical simulations to evaluate the PPA auction scheme. Our results show that, in relevant economic settings, the PPA revenues would be strictly higher than the existing auction payment schemes.

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Section: Coordinated and Collusivementioning

confidence: 99%

A Price-per-attention Auction Scheme Using Mouse Cursor Information

Arapakis

Penta

Joho

et al. 2020

ACM Trans. Inf. Syst.

Self Cite

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“…Earlier research has documented that advertisers might dislike sharing marketing agencies with their competitors, likely due to the fear of information linkages (Day, 2015). However, specifically for the context of online auctions, Decarolis et al (2017) has shown theoretically that advertisers can greatly improve their revenues by delegating to a common agent who bids in the auctions 1 A survey by the Association of National Advertisers (ANA) of 74 large U.S. advertisers indicates that about 77% of the respondents fully outsource their search engine marketing activities (and 16% partially outsource them) to specialized agencies, see ANA (2011). Analogously, a different survey of 325 mid-size advertisers by Econsultancy (EC) reveals that the fraction of companies not performing their paid-search marketing in house increased from 53% to 62% between 2010 and 2011, see EC (2011).…”

Section: Introductionmentioning

confidence: 99%

“…What seems clear is that the increasing concentration in DMA and ATD mentioned above is bound to change the types of strategies available to agencies. The model in Decarolis et al (2017) consider the situation in which an agency is jointly optimizing the bidding strategies of advertisers that have already chosen to bid on common keywords. However, a broader set of strategies is certainly possible as the agency might sustain bid rotation or market split schemes, such that the advertisers that it handles are never directly competing in the auctions.…”

Section: Introductionmentioning

confidence: 99%

Online Auctions and Digital Marketing Agencies

Decarolis

Rovigatti

2017

SSRN Journal

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We present an empirical investigation of the role of marketing agencies in Google's online ad auctions. By combining data on advertisers' affiliation to marketing agencies with data on bidding in ad auctions, we analyze how changes in the concentration of clients in the same industry under the same ad network are associated with changes in keyword bidding in terms of entry, exit, and pricing strategies. Moreover, by exploiting the case of a recent merger between agencies, we estimate through a difference-indifferences strategy that an increase in concentration leads to reduction in the average cost-per-click of the keywords affected by the merger.

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“… See Hendricks et al (2008) orDecarolis et al (2016) for recent analyses of cartels that are not allinclusive.…”

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confidence: 99%

Collusion in Auctions with Constrained Bids: Theory and Evidence from Public Procurement

Chassang¹,

Ortner²

2019

Journal of Political Economy

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We study the mechanics of cartel enforcement and its interaction with bidding constraints in the context of repeated procurement auctions. Under collusion, bidding constraints weaken cartels by limiting the scope for punishment. This yields a test of collusive behavior exploiting the counter-intuitive prediction that introducing minimum prices can lower the winning bid distribution. The model's predictions are borne out in Japanese procurement data, where we find evidence that minimum prices weakened collusion. A robust design insight is that setting a minimum price at the bottom of the observed winning bid distribution necessarily improves over a minimum price of zero.

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Marketing Agencies and Collusive Bidding in Online Ad Auctions

Cited by 16 publications

References 13 publications

A Price-per-attention Auction Scheme Using Mouse Cursor Information

A Price-per-attention Auction Scheme Using Mouse Cursor Information

Online Auctions and Digital Marketing Agencies

Collusion in Auctions with Constrained Bids: Theory and Evidence from Public Procurement

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