Position Auctions with Externalities

  • Patrick Hummel
  • R. Preston McAfee
Part of the Lecture Notes in Computer Science book series (LNCS, volume 8877)

Abstract

This paper presents models for predicted click-through rates in position auctions that take into account the externalities ads shown in other positions may impose on the probability that an ad in a particular position receives a click. We present a general axiomatic methodology for how click probabilities are affected by the qualities of the ads in the other positions, and illustrate that using these axioms will increase revenue as long as higher quality ads tend to be ranked ahead of lower quality ads. We also present appropriate algorithms for selecting the optimal allocation of ads when predicted click-through rates are governed by a natural special case of this axiomatic model of externalities.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Aggarwal, G., Feldman, J., Muthukrishnan, S., Pál, M.: Sponsored search auctions with Markovian users. In: Papadimitriou, C., Zhang, S. (eds.) WINE 2008. LNCS, vol. 5385, pp. 621–628. Springer, Heidelberg (2008)CrossRefGoogle Scholar
  2. 2.
    Athey, S., Ellison, G.: Position auctions with consumer search. Quarterly Journal of Economics 126(3), 1213–1270 (2011)CrossRefMATHGoogle Scholar
  3. 3.
    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
  4. 4.
    Edelman, B., Ostrovsky, M., Schwarz, M.: Internet advertising and the generalized second price auction: Selling billions of dollars of keywords. American Economic Review 97(1), 242–259 (2007)CrossRefGoogle Scholar
  5. 5.
    Fotakis, D., Krysta, P., Telelis, O.: Externalities among advertisers in sponsored search. In: Persiano, G. (ed.) SAGT 2011. LNCS, vol. 6982, pp. 105–116. Springer, Heidelberg (2011)CrossRefGoogle Scholar
  6. 6.
    Ghosh, A., Mahdian, M.: Externalities in online advertising. In: WWW 2008, pp. 161–168 (2008)Google Scholar
  7. 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)CrossRefGoogle Scholar
  8. 8.
    Gomes, R., Immorlica, N., Markakis, E.: Externalities in keyword auctions: An empirical and theoretical assessment. In: Leonardi, S. (ed.) WINE 2009. LNCS, vol. 5929, pp. 172–183. Springer, Heidelberg (2009)CrossRefGoogle Scholar
  9. 9.
    Hummel, P., McAfee, R.P.: Position auctions with externalities and brand effects. arXiv:1409.4687 [cs.GT] (2014)Google Scholar
  10. 10.
    Jerath, K., Ma, L., Park, Y.-H., Srinivasan, K.: A “position paradox” in sponsored search auctions. Marketing Science 30(4), 612–627 (2011)CrossRefGoogle Scholar
  11. 11.
    Jeziorski, P., Segal, I.: What makes them click: Empirical analysis of consumer demand for search advertising. Typescript, University of California Berkeley, Berkeley, CA (2014)Google Scholar
  12. 12.
    Kempe, D., Mahdian, M.: A cascade model for externalities in sponsored search. In: Papadimitriou, C., Zhang, S. (eds.) WINE 2008. LNCS, vol. 5385, pp. 585–596. Springer, Heidelberg (2008)CrossRefGoogle Scholar
  13. 13.
    Varian, H.: Position auctions. International Journal of Industrial Organization 25(6), 1163–1178 (2007)CrossRefGoogle Scholar

Copyright information

© Springer International Publishing Switzerland 2014

Authors and Affiliations

  • Patrick Hummel
    • 1
  • R. Preston McAfee
    • 2
  1. 1.Google Inc.USA
  2. 2.Microsoft Corp.USA

Personalised recommendations