Sponsored Search Auctions

Lahaie, Sébastien; Pennock, David M.; Saberi, Amin; Vohra, Rakesh

doi:10.1017/cbo9780511800481.030

Cited by 108 publications

(72 citation statements)

References 9 publications

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“…Many of the core theoretical results (e.g., [8,17,2,14]) are based on the simplifying assumption of separable click-through rates. That is, the probability of ad a being clicked in position i is the product q a λ i of an ad-specific term and a position-dependent one.…”

Section: Related Workmentioning

confidence: 99%

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A Cascade Model for Externalities in Sponsored Search

Kempe

Mahdian

2008

Lecture Notes in Computer Science

153

136

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Abstract. One of the most important yet insufficiently studied issues in online advertising is the externality effect among ads: the value of an ad impression on a page is affected not just by the location that the ad is placed in, but also by the set of other ads displayed on the page. For instance, a high quality competing ad can detract users from another ad, while a low quality ad could cause the viewer to abandon the page altogether. In this paper, we propose and analyze a model for externalities in sponsored search ads. Our model is based on the assumption that users will visually scan the list of ads from the top to the bottom. After each ad, they make independent random decisions with ad-specific probabilities on whether to continue scanning. We then generalize the model in two ways: allowing for multiple separate blocks of ads, and allowing click probabilities to explicitly depend on ad positions as well. For the most basic model, we present a polynomial-time incentive-compatible auction mechanism for allocating and pricing ad slots. For the generalizations, we give approximation algorithms for the allocation of ads.

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Section: Related Workmentioning

confidence: 99%

“…The simplest model, which is currently widely used in the industry and also is the basis for most theoretical work in the area (e.g., [8,17,2,14]), is based on separable click-through rates. It assumes that the CTR of an ad a ∈ {1, .…”

Section: Click-through Models and Allocationsmentioning

confidence: 99%

A Cascade Model for Externalities in Sponsored Search

Kempe

Mahdian

2008

Lecture Notes in Computer Science

153

136

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“…Sponsored search has been an active area of research in the last several years after the early papers explored the foundational models [8,3,17,15]. In general, the motivation for the work that followed is that sponsored search in practice is much more complex than as described by the first models; see [9] for a discussion.…”

Section: Related Workmentioning

confidence: 99%

Sponsored Search Auctions with Markovian Users

Aggarwal

Feldman

Muthukrishnan

et al. 2008

Lecture Notes in Computer Science

123

146

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Abstract. Sponsored search involves running an auction among advertisers who bid in order to have their ad shown next to search results for specific keywords. The most popular auction for sponsored search is the "Generalized Second Price" (GSP) auction where advertisers are assigned to slots in the decreasing order of their score, which is defined as the product of their bid and click-through rate. One of the main advantages of this simple ranking is that bidding strategy is intuitive: to move up to a more prominent slot on the results page, bid more. This makes it simple for advertisers to strategize. However this ranking only maximizes efficiency under the assumption that the probability of a user clicking on an ad is independent of the other ads shown on the page. We study a Markovian user model that does not make this assumption. Under this model, the most efficient assignment is no longer a simple ranking function as in GSP. We show that the optimal assignment can be found efficiently (even in near-linear time). As a result of the more sophisticated structure of the optimal assignment, bidding dynamics become more complex: indeed it is no longer clear that bidding more moves one higher on the page. Our main technical result is that despite the added complexity of the bidding dynamics, the optimal assignment has the property that ad position is still monotone in bid. Thus even in this richer user model, our mechanism retains the core bidding dynamics of the GSP auction that make it useful for advertisers.

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“…However, there is a pricing scheme that is truthful, which is based on an application of the famous Vickrey-Clarke-Groves (VCG) mechanism [42,10,23]VCG (Vickrey-ClarkeGroves) mechanism. Furthermore, the GSP auction, while not truthful, still has a well-understood pure-strategy Nash equilibrium: For a more detailed discussion of this line of research, we refer the reader to [29]. Authors in [5] also show that under a more general click probability model, there is a pricing method that is truthful.…”

Section: Existing Auctionsmentioning

confidence: 99%

Algorithmic Methods for Sponsored Search Advertising

Feldman,

Muthukrishnan

2008

Performance Modeling and Engineering

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Modern commercial Internet search engines display advertisements along side the search results in response to user queries. Such sponsored search relies on market mechanisms to elicit prices for these advertisements, making use of an auction among advertisers who bid in order to have their ads shown for specific keywords. We present an overview of the current systems for such auctions and also describe the underlying game-theoretic aspects. The game involves three partiesadvertisers, the search engine, and search users-and we present example research directions that emphasize the role of each. The algorithms for bidding and pricing in these games use techniques from three mathematical areas: mechanism design, optimization, and statistical estimation. Finally, we present some challenges in sponsored search advertising.

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Sponsored Search Auctions

Cited by 108 publications

References 9 publications

A Cascade Model for Externalities in Sponsored Search

A Cascade Model for Externalities in Sponsored Search

Sponsored Search Auctions with Markovian Users

Algorithmic Methods for Sponsored Search Advertising

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