Efficient advert assignment

DOI10.1287/OPRE.2016.1519MaRDI QIDQ2830760zbMATH OpenOpenAlexFDO

Authors Frank Kelly, Peter Key, Neil Walton

Publication date 31 October 2016

Published in Operations Research (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1404.2750

zbMATH Keywords

auctiondecompositionsocial welfare optimizationsponsored searchVCG mechanism

Mathematics Subject Classification ID

Discrete location and assignment (90B80) Noncooperative games (91A10) Auctions, bargaining, bidding and selling, and other market models (91B26)

Abstract: We develop a framework for the analysis of large-scale Ad-auctions where adverts are assigned over a continuum of search types. For this pay-per-click market, we provide an efficient mechanism that maximizes social welfare. In particular, we show that the social welfare optimization can be solved in separate optimizations conducted on the time-scales relevant to the search platform and advertisers. Here, on each search occurrence, the platform solves an assignment problem and, on a slower time-scale, each advertiser submits a bid which matches its demand for click-throughs with supply. Importantly, knowledge of global parameters, such as the distribution of search terms, is not required when separating the problem in this way. Exploiting the information asymmetry between the platform and advertiser, we describe a simple mechanism which incentivizes truthful bidding and has a unique Nash equilibrium that is socially optimal, and thus implements our decomposition. Further, we consider models where advertisers adapt their bids smoothly over time, and prove convergence to the solution that maximizes social welfare. Finally, we describe several extensions which illustrate the flexibility and tractability of our framework.

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Cited in

(12)

• The ad types problem
• Designing markets for daily deals
• Prediction and welfare in ad auctions
• The multiple attribution problem in pay-per-conversion advertising
• scientific article; zbMATH DE number 1479855 (Why is no real title available?)
• Prediction and welfare in ad auctions
• Optimal price/advertising menus for two-sided media platforms
• Incentivizing advertiser networks to submit multiple bids
• Dynamic pay-per-action mechanisms and applications to online advertising
• Individual fairness in advertising auctions through inverse proportionality
• A practical multi-objective auction design and optimization framework for sponsored search
• Autobidding with constraints

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