General auction mechanism for search advertising

Gagan Aggarwal, S. Muthukrishnan, Dávid Pál, Martin Pál

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

    Abstract

    In sponsored search, a number of advertising slots is available on a search results page, and have to be allocated among a set of advertisers competing to display an ad on the page. This gives rise to a bipartite matching market that is typically cleared by the way of an automated auction. Several auction mechanisms have been proposed, with variants of the Generalized Second Price (GSP) being widely used in practice. There is a rich body of work on bipartite matching markets that builds upon the stable marriage model of Gale and Shapley and the assignment model of Shapley and Shubik. This line of research offers deep insights into the structure of stable outcomes in such markets and their incentive properties. In this paper, we model advertising auctions in terms of an assignment model with linear utilities, extended with bidder and item specific maximum and minimum prices. Auction mechanisms like the commonly used GSP or the well-known Vickrey-Clarke-Groves (VCG) can be interpreted as simply computing a bidder-optimal stable matching in this model, for a suitably defined set of bidder preferences, but our model includes much richer bidders and preferences. We prove that in our model the existence of a stable matching is guaranteed, and under a non-degeneracy assumption a bidder-optimal stable matching exists as well. We give an algorithm to find such matching in polynomial time, and use it to design truthful mechanism that generalizes GSP, is truthful for profit-maximizing bidders, correctly implements features like bidder-specific minimum prices and position-specific bids, and works for rich mixtures of bidders and preferences. Our main technical contributions are the existence of bidder-optimal matchings and strate-gyproofness of the resulting mechanism, and are proved by induction on the progress of the matching algorithm. Copyright is held by the International World Wide Web Conference Committee (IW3C2).

    Original languageEnglish (US)
    Title of host publicationWWW'09 - Proceedings of the 18th International World Wide Web Conference
    Pages241-250
    Number of pages10
    DOIs
    StatePublished - 2009
    Event18th International World Wide Web Conference, WWW 2009 - Madrid, Spain
    Duration: Apr 20 2009Apr 24 2009

    Publication series

    NameWWW'09 - Proceedings of the 18th International World Wide Web Conference

    Other

    Other18th International World Wide Web Conference, WWW 2009
    CountrySpain
    CityMadrid
    Period4/20/094/24/09

    Keywords

    • Game theory
    • Sponsored search auctions
    • Stable matchings

    ASJC Scopus subject areas

    • Computer Networks and Communications

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  • Cite this

    Aggarwal, G., Muthukrishnan, S., Pál, D., & Pál, M. (2009). General auction mechanism for search advertising. In WWW'09 - Proceedings of the 18th International World Wide Web Conference (pp. 241-250). (WWW'09 - Proceedings of the 18th International World Wide Web Conference). https://doi.org/10.1145/1526709.1526742