Skip to main content
Springer Nature Link
Log in

Externalities in Keyword Auctions: An Empirical and Theoretical Assessment

  • Conference paper
Internet and Network Economics (WINE 2009)

Part of the book series: Lecture Notes in Computer Science ((LNISA,volume 5929))

Included in the following conference series:

Abstract

The value of acquiring a slot in a sponsored search list (that comes along with the organic links in a search engine’s result page) might depend on who else is shown in the other sponsored positions. To empirically evaluate this claim, we develop a model of ordered search applied to keyword advertising, in which users browse slots from the top to the bottom of the sponsored list and make their clicking decisions slot by slot. Our contribution is twofold: first, we use impression and click data from Microsoft Live to estimate the ordered search model. With these estimates in hand, we are able to assess how the click-through rate of an ad is affected by the user’s click history and by the other competing links. Our dataset suggests that externality effects are indeed economically and statistically significant. Second, we study Nash equilibria of the Generalized Second Price Auction (GSP) and characterize the scoring rule that produces greatest profits in a complete information setting.

Most of this work was done while all authors were at the Center for Math and Computer Science (CWI), Amsterdam. The project was partially funded by the Microsoft external research program “Beyond Search: Semantic Computing and Internet Economics”.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Similar content being viewed by others

References

  1. Aggarwal, G., Feldman, J., Muthukrishnan, S., Pal, M.: Sponsored search auctions with markovian users. In: Papadimitriou, C., Zhang, S. (eds.) WINE 2008. LNCS, vol. 5385, pp. 621–628. Springer, Heidelberg (2008)

    Chapter  Google Scholar 

  2. Aggarwal, G., Goel, A., Motwani, R.: Truthful auctions for pricing search keywords. In: Proc. the Seventh ACM Conference on Electronic Commerce, Ann Arbor, Michigan, USA (2006)

    Google Scholar 

  3. Athey, S., Ellison, G.: Position auctions with consumer search. working paper (2008)

    Google Scholar 

  4. Craswell, N., Zoeter, O., Taylor, M., Ramsey, B.: An experimental comparison of click position-bias models. In: WSDM 2008, pp. 87–94 (2008)

    Google Scholar 

  5. Edelman, B., Ostrovsky, M., Schwarz, M.: Internet advertising and the generalized second price auction: Selling billions of dollars worth in keywords. American Economic Review 97(1), 242–259 (2007)

    Article  Google Scholar 

  6. Ghosh, A., Mahdian, M.: Externalities in online advertising. In: International World Wide Web Conference, WWW (2008)

    Google Scholar 

  7. Giotis, I., Karlin, A.R.: On the equilibria and efficiency of the gsp mechanism in keyword auctions with externalities. In: Papadimitriou, C., Zhang, S. (eds.) WINE 2008. LNCS, vol. 5385, pp. 629–638. Springer, Heidelberg (2008)

    Chapter  Google Scholar 

  8. Jeziorskiy, P., Segal, I.: What makes them click: Empirical analysis of consumer demand for search advertising (working paper) (2009)

    Google Scholar 

  9. Joachims, T., Granka, L., Pan, B., Hembrooke, H., Gay, G.: Accurately predicting clickthrough data as implicit feedback. In: SIGIR, pp. 154–161 (2005)

    Google Scholar 

  10. Kempe, D., Mahdian, M.: A cascade model for externalities in sponsored search. In: Workshop on Internet and Network Economics (WINE), Shanghai, China (2008)

    Google Scholar 

  11. Lahaie, S.: An analysis of alternative slot auction designs for sponsored search. In: Proc. the Seventh ACM Conference on Electronic Commerce, Ann Arbor, Michigan, USA (2006)

    Google Scholar 

  12. Lahaie, S., Pennock, D., Saberi, A., Vohra, R.: 28: Sponsored search auctions. In: Nisan, N., Roughgarden, T., Tardos, E., Vazirani, V. (eds.) Algorithmic Game Theory. Cambridge University Press, Cambridge (2007)

    Google Scholar 

  13. Varian, H.: Position auctions. International Journal of Industrial Organization 25, 1163–1178 (2007)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, Northwestern University,  

    Renato Gomes

  2. Department of EECS, Northwestern University,  

    Nicole Immorlica

  3. Department of Informatics, Athens University of Economics and Business, Athens, Greece

    Evangelos Markakis

Authors
  1. Renato Gomes
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Nicole Immorlica
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Evangelos Markakis
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Department of Information and Systems, Sapienza University of Rome, Via Ariosto 25, 00185, Roma, Italy

    Stefano Leonardi

Rights and permissions

Reprints and permissions

Copyright information

© 2009 Springer-Verlag Berlin Heidelberg

About this paper

Cite this paper

Gomes, R., Immorlica, N., Markakis, E. (2009). Externalities in Keyword Auctions: An Empirical and Theoretical Assessment. In: Leonardi, S. (eds) Internet and Network Economics. WINE 2009. Lecture Notes in Computer Science, vol 5929. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-10841-9_17

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-10841-9_17

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-10840-2

  • Online ISBN: 978-3-642-10841-9

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics

Search

Navigation