Optimising Trade-offs Among Stakeholders in Ad Auctions

We examine trade-offs among stakeholders in ad auctions. Our metrics are the revenue for the utility of the auctioneer, the number of clicks for the utility of the users and the welfare for the utility of the advertisers. We show how to optimize linear combinations of the stakeholder utilities, showing that these can be tackled through a GSP auction with a per-click reserve price. We then examine constrained optimization of stakeholder utilities. We use simulations and analysis of real-world sponsored search auction data to demonstrate the feasible trade-offs, examining the effect of changing the allowed number of ads on the utilities of the stakeholders. We investigate both short term effects, when the players do not have the time to modify their behavior, and long term equilibrium conditions. Finally, we examine a combinatorially richer constrained optimization problem, where there are several possible allowed configurations (templates) of ad formats. This model captures richer ad formats, which allow using the available screen real estate in various ways. We show that two natural generalizations of the GSP auction rules to this domain are poorly behaved, resulting in not having a symmetric Nash equilibrium or having one with poor welfare. We also provide positive results for restricted cases.Comment: 18 pages, 10 figures, ACM Conference on Economics and Computation 201

Search Engine Advertising (SEA) Or Organic Links: Do Customers See The Difference?

This study seeks to investigate the perceptions and attitudes of internet users toward the sponsored link. In light of this study, respondents do not express greater bias with sponsored links in comparison with traditional advertising media, as well as in comparison with organic links. Among factors that mostly affect searchers’ attitudes, the informativeness is the critical factor; however, no specific category of information will significantly increase the respondent’s likelihood to explore a sponsored link. It is rather text relevance to the keyword typed by the searcher that makes a link attractive. Results also indicate that business students recognize a great value and potential benefits of using search engine advertising as a marketing tool

Impression Effect vs. Click-through Effect: Mechanism Design of Online Advertising

Search advertising and display advertising are two major online advertising formats. Search advertising emphasizes ads’ click-through effect. Advertisers only pay when users click the link of their ads. Traditional display advertising emphasizes ads’ impression effect. Most display ads are charged based on the number of views on the ads. Considering that most online ads increase brand awareness (impression effect) and directly promote sales (click-through effect), the not-emphasized effect in search advertising or display advertising actually has a significant impact on the market outcome. However, these impacts have been largely ignored. In this paper, we examine various mechanisms in search and display advertising by considering both ads’ impression effect and click-through effect. Interestingly, we show a seesaw relationship between ads’ two effects in search advertising. The advertiser whose advertisement has a strong click-through effect benefits relatively less from its impression effect. In display advertising, the real-time-bidding (RTB) mechanism considers both ads’ impression effect and click-through effect. It allows a publisher to gain more surplus than that through a static auction. However, we show that RTB is associated with a high risk of market failure

Essays on auction mechanisms and resource allocation in keyword advertising

textAdvances in information technology have created radically new business models, most notably the integration of advertising with keyword-based targeting, or "keyword advertising." Keyword advertising has two main variations: advertising based on keywords employed by users in search engines, often known as "sponsored links," and advertising based on keywords embedded in the content users view, often known as "contextual advertising." Keyword advertising providers such as Google and Yahoo! use auctions to allocate advertising slots. This dissertation examines the design of keyword auctions. It consists of three essays. The first essay "Ex-Ante Information and the Design of Keyword Auctions" focuses on how to incorporate available information into auction design. In our keyword auction model, advertisers bid their willingness-to-pay per click on their advertisements, and the advertising provider can weigh advertisers' bids differently and require different minimum bids based on advertisers' click-generating potential. We study the impact and design of such weighting schemes and minimum-bids policies. We find that weighting scheme determines how advertisers with different click-generating potential match in equilibrium. Minimum bids exclude low-valuation advertisers and at the same time may distort the equilibrium matching. The efficient design of keyword auctions requires weighting advertisers' bids by their expected click-through-rates, and requires the same minimum weighted bids. The revenue-maximizing weighting scheme may or may not favor advertisers with low click-generating potential. The revenue-maximizing minimum-bid policy differs from those prescribed in the standard auction design literature. Keyword auctions that employ the revenue-maximizing weighting scheme and differentiated minimum bid policy can generate higher revenue than standard fixed-payment auctions. The dynamics of bidders' performance is examined in the second essay, "Keyword Auctions, Unit-price Contracts, and the Role of Commitment." We extend earlier static models by allowing bidders with lower performance levels to improve their performance at a certain cost. We examine the impact of the weighting scheme on overall bidder performance, the auction efficiency, and the auctioneer's revenue, and derive the revenue-maximizing and efficient policy accordingly. Moreover, the possible upgrade in bidders' performance levels gives the auctioneer an incentive to modify the auction rules over time, as is confirmed by the practice of Yahoo! And Google. We thus compare the auctioneer's revenue-maximizing policies when she is fully committed to the auction rule and when not, and show that she should give less preferential treatment to low-performance advertisers when she is fully committed. In the third essay, "How to Slice the Pie? Optimal Share Structure Design in Keyword Auctions," we study the design of share structures in keyword auctions. Auctions for keyword advertising resources can be viewed as share auctions in which the highest bidder gets the largest share, the second highest bidder gets the second largest share, and so on. A share structure problem arises in such a setting regarding how much resources to set aside for the highest bidder, for the second highest bidder, etc. We address this problem under a general specification and derive implications on how the optimal share structure should change with bidders' price elasticity of demand for exposure, their valuation distribution, total resources, and minimum bids.Managemen

Adword auction bidding strategies of budget-limited advertisers on competing search engines

International audienceThe economic stakes of advertising on the Internet -and in particular, of auctions for keywords in search engines- are enormous and still increasing. We focus in this paper on situations where bidders (advertisers) on sponsored search auction systems have a limited budget, so that they may not be able to afford to participate in all auctions. Using a game-theoretical model of the strategic interactions among advertisers, we analyze the equilibrium strategies in terms of bidding frequencies, in the case of one monopoly search engine and when two search engines are in competition. Our results exhibit the importance for search engines to develop their attractiveness to customers, due to the impact this has on auction revenues

A Systematic Review on Search Engine Advertising

The innovation of Search Engine Advertising (SEA) was first introduced in 1998. It soon became a very popular tool among practitioners for promoting their websites on the Web and turned into a billion dollar revenue source for search engines. In parallel with its rapid growth in use, SEA attracted the attention of academic researchers resulting in a large number of publications on the topic of SEA. However, no comprehensive review of this accumulated body of knowledge is currently available. This shortcoming has motivated us to conduct a systematic review of SEA literature. Herewith, we searched for and collected 101 papers on the topic of SEA, published in 72 journals from different disciplines and analyzed them to answer the research questions for this study. We have identified the historical development of SEA literature, predominant journals in the publication of SEA research, active reference disciplines as well as the main researchers in the field of SEA. Moreover, we have classified SEA literature into four categories and 10 research topics. We also uncovered a number of gaps in SEA literature and provided future research direction accordingly. Available at: https://aisel.aisnet.org/pajais/vol7/iss3/2

Publicité digitale et achat de clics ciblés (CPC) : Avantages et limites.

La publicité digitale est largement utilisée pour promouvoir les offres et améliorer la réputation à moindre coût et de manière efficace afin d’optimiser le rendement des campagnes, elle permet aux organisations de transmettre des informations de manière ciblées à leurs audiences avec un maximum de précision. La publicité basée sur le coût par clic (CPC) est l'une des méthodes les plus utilisés pour ce type de publicité sur Internet. Il est fréquemment loué pour les divers avantages qu'il procure, mais aussi, assez critiqué pour les fraudes et les autres problèmes liés à sa mise en œuvre. Même si les études dans ce domaine ne sont pas très nombreuses, elles ont fait des efforts considérables pour découvrir les avantages et les limites de l'utilisation du CPC comme outil publicitaire. Cette recherche examine plus de 60 articles sur ce sujet afin de consolider leurs résultats et d'atteindre une connaissance générale sur l’importance et les implications de ce type de publicité sur la communication des organisations, et décrit les résultats, les limites et les voies de recherche de cette thématique

Online Channels and Store Brands: Strategic Interactions

This study examines the strategic interactions between the online channel strategies of a national brand manufacturer and the store brand strategies of a retailer. We develop a game-theoretical model in which a manufacturer makes channel choices, a retailer selects product lines, and both need to take the other’s strategy into consideration. We compare the results with cases where no interactions are involved to explicate how the manufacturer’s online channel choice affects the retailer’s store brand strategy, and vice versa. The results suggest that the retailer executes a more defensive strategy if the threat of the online channel is severe but tends to be cooperative when the threat is less alarming. The manufacturer, however, would rather give up its efficient online channel to act cooperatively when the store brand is introduced. Our findings explain certain stylized facts regarding supply chain coordination