research-article

Display Advertising Auctions with Arbitrage

Authors:

Ruggiero Cavallo,

R. Preston Mcafee,

Sergei VassilvitskiiAuthors Info & Claims

ACM Transactions on Economics and Computation (TEAC), Volume 3, Issue 3

Article No.: 15, Pages 1 - 23

https://doi.org/10.1145/2668033

Published: 23 June 2015 Publication History

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Abstract

Online display advertising exchanges connect Web publishers with advertisers seeking to place ads. In many cases, the advertiser obtains value from an ad impression (a viewing by a user) only if it is clicked, and frequently advertisers prefer to pay contingent on this occurring. But at the same time, many publishers demand payment independent of clicks. Arbitragers with good estimates of click-probabilities can resolve this conflict by absorbing the risk and acting as an intermediary, paying the publisher on allocation and being paid only if a click occurs. This article examines the incentives of advertisers and arbitragers and contributes an efficient mechanism with truthful bidding by the advertisers and truthful reporting of click predictions by arbitragers as dominant strategies while, given that a hazard rate condition is satisfied, yielding increased revenue to the publisher. We provide empirical evidence based on bid data from Yahoo's Right Media Exchange suggesting that the mechanism would increase revenue in practice.

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Cited By

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Santos MMota ICampos P(2022)Analysis of online position auctions for search engine marketingJournal of Marketing Analytics10.1057/s41270-022-00170-xOnline publication date: 28-May-2022
https://doi.org/10.1057/s41270-022-00170-x
Ghorbani ZKargaran SSaberi AHaghighinasab MJamali SAle Ebrahim N(2021)Trends and patterns in digital marketing research: bibliometric analysisJournal of Marketing Analytics10.1057/s41270-021-00116-910:2(158-172)Online publication date: 12-Aug-2021
https://doi.org/10.1057/s41270-021-00116-9
Miralles-Pechuán LJiménez FGarcía J(2021)An Alternative Auction System to Generalized Second-Price for Real-Time Bidding Optimized Using Genetic AlgorithmsProceedings of Sixth International Congress on Information and Communication Technology10.1007/978-981-16-2380-6_8(83-107)Online publication date: 17-Sep-2021
https://doi.org/10.1007/978-981-16-2380-6_8
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Index Terms

Display Advertising Auctions with Arbitrage
1. Applied computing
  1. Law, social and behavioral sciences
    1. Economics

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Published In

cover image ACM Transactions on Economics and Computation

ACM Transactions on Economics and Computation Volume 3, Issue 3

June 2015

100 pages

ISSN:2167-8375

EISSN:2167-8383

DOI:10.1145/2795422

Editors:
Vincent Conitzer
Duke University
,
Preston McAfee
Google

Issue’s Table of Contents

Permission to make digital or hard copies of part or all of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for third-party components of this work must be honored. For all other uses, contact the Owner/Author.

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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 23 June 2015

Accepted: 01 September 2014

Revised: 01 February 2013

Received: 01 July 2012

Published in TEAC Volume 3, Issue 3

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Cited By

View all

Santos MMota ICampos P(2022)Analysis of online position auctions for search engine marketingJournal of Marketing Analytics10.1057/s41270-022-00170-xOnline publication date: 28-May-2022
https://doi.org/10.1057/s41270-022-00170-x
Ghorbani ZKargaran SSaberi AHaghighinasab MJamali SAle Ebrahim N(2021)Trends and patterns in digital marketing research: bibliometric analysisJournal of Marketing Analytics10.1057/s41270-021-00116-910:2(158-172)Online publication date: 12-Aug-2021
https://doi.org/10.1057/s41270-021-00116-9
Miralles-Pechuán LJiménez FGarcía J(2021)An Alternative Auction System to Generalized Second-Price for Real-Time Bidding Optimized Using Genetic AlgorithmsProceedings of Sixth International Congress on Information and Communication Technology10.1007/978-981-16-2380-6_8(83-107)Online publication date: 17-Sep-2021
https://doi.org/10.1007/978-981-16-2380-6_8
Loebbecke CCremer SRichter M(2020)Header Bidding as Smart Service for Selling Ads in the Digital EraJournal of Information Systems Engineering and Management10.29333/jisem/84835:4(em0123)Online publication date: 2020
https://doi.org/10.29333/jisem/8483
Feldman MTennenholtz MWeinstein O(2020)Distributed Signaling GamesACM Transactions on Economics and Computation10.1145/33815298:2(1-26)Online publication date: 3-May-2020
https://dl.acm.org/doi/10.1145/3381529
Qin RYuan YWang F(2018)A Pareto optimal mechanism for demand-side platforms in real time bidding advertising marketsInformation Sciences10.1016/j.ins.2018.08.012469(119-140)Online publication date: Dec-2018
https://doi.org/10.1016/j.ins.2018.08.012
Qin RNi XYuan YLi JWang F(2017)Revenue models for demand side platforms in real time bidding advertising2017 IEEE International Conference on Systems, Man, and Cybernetics (SMC)10.1109/SMC.2017.8122644(438-443)Online publication date: Oct-2017
https://doi.org/10.1109/SMC.2017.8122644
Qin RYuan YNi XWang F(2017)Exploring new mechanisms for demand-side platforms in real time bidding markets2017 Chinese Automation Congress (CAC)10.1109/CAC.2017.8244164(7658-7663)Online publication date: Oct-2017
https://doi.org/10.1109/CAC.2017.8244164
Qin RYuan YWang F(2017)Improving Auction Mechanisms for Online Real-Time Bidding Advertising with a Two-stage Resale ModelIFAC-PapersOnLine10.1016/j.ifacol.2017.08.237250:1(13575-13580)Online publication date: Jul-2017
https://doi.org/10.1016/j.ifacol.2017.08.2372
Qin RYuan YWang F(2017)Exploring the optimal granularity for market segmentation in RTB advertising via computational experiment approachElectronic Commerce Research and Applications10.1016/j.elerap.2017.07.00124:C(68-83)Online publication date: 1-Jul-2017
https://dl.acm.org/doi/10.1016/j.elerap.2017.07.001
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