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

Patrick Maillé () and Bruno Tuffin ()
Additional contact information
Patrick Maillé: IMT Atlantique
Bruno Tuffin: Inria Rennes Bretagne Atlantique

Electronic Commerce Research, 2018, vol. 18, issue 3, No 3, 485-506

Abstract: 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.

Keywords: Advertisements; Auctions; Pay-per-click; Pay-per-impression (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10660-017-9267-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:elcore:v:18:y:2018:i:3:d:10.1007_s10660-017-9267-6

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10660

DOI: 10.1007/s10660-017-9267-6

Access Statistics for this article

Electronic Commerce Research is currently edited by James Westland

More articles in Electronic Commerce Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().