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.
A preliminary version of this paper was presented at the 4th Workshop on Ad Auctions, held in conjunction with the 2008 ACM Conference on Electronic Commerce.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Aggarwal, G., Feldman, J., Muthukrishnan, S., Pál, M.: Sponsored search auctions with markovian users. In: Proc. 4th Workshop on Ad Auctions (2008)
Aggarwal, G., Goel, A., Motwani, R.: Truthful auctions for pricing search keywords. In: Proc. 8th ACM Conf. on Electronic Commerce, pp. 1–7 (2006)
Athey, S., Ellison, G.: Position auctions with consumer search. Working Paper (September 2007)
Cary, M., Das, A., Edelman, B., Giotis, I., Heimerl, K., Karlin, A., Mathieu, C., Schwarz, M.: Greedy bidding strategies for keyword auctions. In: Proc. 9th ACM Conf. on Electronic Commerce, pp. 262–271 (2007)
Clarke, E.: Multipart pricing of public goods. Public Choice 11, 17–33 (1971)
Craswell, N., Zoeter, O., Taylor, M., Ramsey, B.: An experimental comparison of click position-bias models. In: Proc. 1st Intl. Conf. on Web Search and Data Mining (2008)
Das, A., Giotis, I., Karlin, A., Mathieu, C.: On the effects of competing advertisements in keyword auctions (May 2008) (unpublished manuscript)
Edelman, B., Ostrovsky, M., Schwarz, M.: Internet advertising and the generalized second price auction: Selling billions of dollars worth of keywords. American Economic Review 97(1), 242–259 (2007)
Ghosh, A., Mahdian, M.: Externalities in online advertising. In: 17th Intl. World Wide Web Conference (2008)
Groves, T.: Incentives in teams. Econometrica 41, 617–631 (1973)
Joachims, T., Granka, L., Pan, B., Hembrooke, H., Radlinski, F., Gay, G.: Evaluating the accuracy of implicit feedback from clicks and query reformulations in web search. ACM Transactions on Information Systems (TOIS) 25(2) (2007)
Lahaie, S.: An analysis of alternative slot auction designs for sponsored search. In: Proc. 8th ACM Conf. on Electronic Commerce, pp. 218–227 (2006)
Lahaie, S., Pennock, D., Saberi, A., Vohra, R.: Sponsored search auctions. In: Nisan, N., Roughgarden, T., Tardos, É., Vazirani, V. (eds.) Algorithmic Game Theory, ch. 28. Cambridge University Press, Cambridge (2007)
Mahdian, M., Nazerzadeh, H., Saberi, A.: Allocating online advertisement space with unreliable estimates. In: Proc. 9th ACM Conf. on Electronic Commerce, pp. 288–294 (2007)
Muthukrishnan, S., Pál, M., Svitkina, Z.: Stochastic models for budget optimization in search-based advertising. In: Deng, X., Graham, F.C. (eds.) WINE 2007. LNCS, vol. 4858, pp. 131–142. Springer, Heidelberg (2007)
Varian, H.: Position auctions. Intl. J. of Industrial Organization 25(6), 1163–1178 (2007)
Vickrey, W.: Counterspeculation, auctions, and competitive sealed tenders. J. of Finance 16, 8–37 (1961)
Wortman, J., Vorobeychik, Y., Li, L., Langford, J.: Maintaining equilibria during exploration in sponsored search auctions. In: Deng, X., Graham, F.C. (eds.) WINE 2007. LNCS, vol. 4858, pp. 119–130. Springer, Heidelberg (2007)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2008 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Kempe, D., Mahdian, M. (2008). A Cascade Model for Externalities in Sponsored Search. In: Papadimitriou, C., Zhang, S. (eds) Internet and Network Economics. WINE 2008. Lecture Notes in Computer Science, vol 5385. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-92185-1_65
Download citation
DOI: https://doi.org/10.1007/978-3-540-92185-1_65
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-92184-4
Online ISBN: 978-3-540-92185-1
eBook Packages: Computer ScienceComputer Science (R0)