Repeated Auctions with Budgets in Ad Exchanges: Approximations and Design

• 成果类型: Article
• 署名作者: Balseiro, Santiago R.; Besbes, Omar; Weintraub, Gabriel Y.
• 署名单位: Duke University; Columbia University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2014.2022
• 发表日期: 2015
• 页码: 864-884
• 关键词: Auction design; revenue management; ad exchange; display advertising; internet; budget constraints; dynamic games; mean field; fluid approximation

摘要

Ad exchanges are emerging Internet markets where advertisers may purchase display ad placements, in real time and based on specific viewer information, directly from publishers via a simple auction mechanism. Advertisers join these markets with a prespecified budget and participate in multiple second-price auctions over the length of a campaign. This paper studies the competitive landscape that arises in ad exchanges and the implications for publishers' decisions. The presence of budgets introduces dynamic interactions among advertisers that need to be taken into account when attempting to characterize the bidding landscape or the impact of changes in the auction design. To this end, we introduce the notion of a fluid mean-field equilibrium (FMFE) that is behaviorally appealing and computationally tractable, and in some important cases, it yields a closed-form characterization. We establish that an FMFE approximates well the rational behavior of advertisers in these markets. We then show how this framework may be used to provide sharp prescriptions for key auction design decisions that publishers face in these markets. In particular, we show that ignoring budgets, a common practice in this literature, can result in significant profit losses for the publisher when setting the reserve price.