Skip to main content
SpringerLink
Log in

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

  • Published:
Electronic Commerce Research Aims and scope Submit manuscript

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 impression 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 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 auctions, we show how to compute payments to ensure incentive compatibility from advertisers as well as maximize the total value extracted from 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 auction can be extended to this context.

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

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

References

  1. Aggarwal, G., Goel, A., & Motwani, R. (2006). Truthful auctions for pricing search keywords. In Proceedings of ACM conference on electronic commerce.

  2. Bachrach, Y., Ceppi, S., Kash, I., Key, P., & Khani, M. R. (2016). Mechanism design for mixed ads. In Proceedings of WWW.

  3. Clarke, E. H. (1971). Multipart pricing of public goods. Public Choice, 11, 17–33.

    Article  Google Scholar 

  4. Dejarnette, R. (2012). Click-through rate of top 10 search results in Google.

  5. Dobzinskia, S., Lavib, R., & Nisan, N. (2012). Multi-unit auctions with budget limits. Games and Economic Behavior, 74(2), 486–503.

    Article  Google Scholar 

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

    Article  Google Scholar 

  7. Goel, A., & Munagala, K. (2009). Hybrid keyword search auctions. In Proceedings of 18th international world wide web conference (pp. 221–230).

  8. Goel, S., Lahaie, S., & Vassilvitskii, S. (2009). Contract auctions for sponsored search. In Proceedings of WINE.

  9. Groves, T. (1973). Incentives in teams. Econometrica, 41(3), 617–631.

    Article  Google Scholar 

  10. Lahaie, S. (2006). An analysis of alternative slot auction designs for sponsored search. In Proceedings of 7th ACM conference on electronic commerce (pp. 218–227).

  11. Maillé, P., Markakis, E., Naldi, M., Stamoulis, G., & Tuffin, B. (2012). Sponsored search auctions: An overview of research with emphasis on game theoretic aspects. Electronic Commerce Research Journal, 12(3), 265–300.

    Article  Google Scholar 

  12. Maillé, P., & Tuffin, B. (2014). Telecommunication network economics: From theory to applications. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  13. Milgrom, P. (1989). Auctions and bidding: A primer. Journal of Economic Perspectives, 3(3), 3–22.

    Article  Google Scholar 

  14. Paes Leme, R., & Tardos, E. (2009). Sponsored search equilibria for conservative bidders. In Proceedings of the 5th workshop on ad auctions, Stanford, CA, USA.

  15. Varian, H. R. (2005). Position auctions. International Journal of Industrial Organization, 25, 1163–1178.

    Article  Google Scholar 

  16. Vickrey, W. (1961). Counterspeculation, auctions, and competitive sealed tenders. Journal of Finance, 16(1), 8–37.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. IMT Atlantique, 2, rue de la Châtaigneraie, 35576, Cesson-Sévigné Cedex, France

    Patrick Maillé

  2. Inria Rennes Bretagne Atlantique, Campus Universitaire de Beaulieu, 35042, Rennes Cedex, France

    Bruno Tuffin

Authors
  1. Patrick Maillé
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Bruno Tuffin
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Bruno Tuffin.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Maillé, P., Tuffin, B. Auctions for online ad space among advertisers sensitive to both views and clicks. Electron Commer Res 18, 485–506 (2018). https://doi.org/10.1007/s10660-017-9267-6

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10660-017-9267-6

Keywords

Search

Navigation