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Auctions for online ad space among advertisers sensitive to both views and clicks

Patrick Maillé 1, 2 Bruno Tuffin 3, *
* Corresponding author
2 OCIF - Objets communicants pour l'Internet du futur
IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire, IRISA-D2 - RÉSEAUX, TÉLÉCOMMUNICATION ET SERVICES
3 DIONYSOS - Dependability Interoperability and perfOrmance aNalYsiS Of networkS
IRISA-D2 - RÉSEAUX, TÉLÉCOMMUNICATION ET SERVICES, Inria Rennes – Bretagne Atlantique
Abstract : Advertisement in dedicated webpage spaces or in search engines sponsored slots is usually sold using auctions, with a payment rule that is either per view or per click. But advertisers can be both sensitive to being viewed (brand awareness effect) and being clicked (conversion into sales). In this paper, we generalize the auction mechanism by including both pricing components: the displayed advertisers are charged when their ad is displayed, and pay an additional price if the ad is clicked. Applying the results for Vickrey-Clarke-Groves (VCG) auctions, we show how to compute payments to ensure incentive compatibility from advertisers as well as maximize the total value of the advertisement slot(s). We provide tight upper bounds for the loss of efficiency due to applying only pay-per-click (or pay-per-view) pricing instead of our scheme. Those bounds depend on the joint distribution of advertisement visibility and population likelihood to click on ads, and can help identify situations where our mechanism yields significant improvements. We also describe how the commonly used generalized second price (GSP) auction can be extended to this context.
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https://hal.inria.fr/hal-01241308
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Submitted on : Tuesday, November 14, 2017 - 9:03:09 AM
Last modification on : Friday, February 26, 2021 - 3:13:07 PM
Long-term archiving on: : Thursday, February 15, 2018 - 1:10:28 PM

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Patrick Maillé, Bruno Tuffin. Auctions for online ad space among advertisers sensitive to both views and clicks. Electronic Commerce Research, Springer Verlag, 2017, ⟨10.1007/s10660-017-9267-6⟩. ⟨hal-01241308v2⟩

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