Budget optimization in search-based advertising auctions

Jon Feldman, S. Muthukrishnan, Martin Pál, Cliff Stein

    Research output: Chapter in Book/Report/Conference proceedingConference contribution


    Internet search companies sell advertisement slots based on users' search queries via an auction. While there has been previous work onthe auction process and its game-theoretic aspects, most of it focuses on the Internet company. In this work, we focus on the advertisers, who must solve a complex optimization problem to decide how to place bids on keywords to maximize their return (the number of user clicks on their ads) for a given budget. We model the entire process and study this budget optimization problem. While most variants are NP-hard, we show, perhaps surprisingly, that simply randomizing between two uniform strategies that bid equally on all the keywordsworks well. More precisely, this strategy gets at least a 1-1/ fraction of the maximum clicks possible. As our preliminary experiments show, such uniform strategies are likely to be practical. We also present inapproximability results, and optimal algorithms for variants of the budget optimization problem.

    Original languageEnglish (US)
    Title of host publicationEC'07 - Proceedings of the Eighth Annual Conference on Electronic Commerce
    Number of pages10
    StatePublished - 2007
    Event8th ACM Conference on Electronic Commerce, EC'07 - San Diego, CA, United States
    Duration: Jun 11 2007Jun 15 2007

    Publication series

    NameEC'07 - Proceedings of the Eighth Annual Conference on Electronic Commerce


    Conference8th ACM Conference on Electronic Commerce, EC'07
    Country/TerritoryUnited States
    CitySan Diego, CA


    • Auctions
    • Bidding
    • Optimization
    • Sponsored search

    ASJC Scopus subject areas

    • Management of Technology and Innovation
    • Marketing
    • Computer Networks and Communications
    • Computer Science Applications


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