On the ranking strategy in adword auctions

International audienceSearch engines get revenue thanks to adword auc- tions, where commercial links are proposed and charged to advertisers as soon as the link is clicked through. Most search engines have chosen (or switched to) a revenue-based ranking and charging scheme instead of a bid-based one. We investigate here the relevance of that scheme when advertisers valuation comes from a random distribution. We show that, depending on the search engines click-through-rate, revenue-based does not always outperform bid-based in terms of revenue to the search engine. As a result, some search engines may have an interest to move to revenue-based ranking while others do not

On the Interest of Introducing Randomness in Ad-Word Auctions

International audienceSearch engines play and will still play a major role in the use of networks. Sponsored search auctions is the basic tool for a return on investment in this industry, accounting for an increasing part of the business. We introduce here a model for consumer behavior in the context of ad-word auctions. Considering that unsatisfying answers of the ad-word engine will lead some consumers to perform again the same request later on, we show that displaying only the highest bidding or highest revenue-producing advertisers in a deterministic way is not always the best strategy for the ad-word engine. Instead, some randomization among advertisers can provide higher revenues. We also design a Vickrey-Clarke-Groves auction rule for a display probability and compare it with the current generalized-second-price scheme