w 8 computational advertising/ sponsered search auctions Flashcards
how do google and advertisers strike a deal between balencing google profit and advertiser budget/utitliy?
they use different payment methods depending on their needs
what is pay-per-1000 impressions (PPM)
an impression is when the ad is displayed
pay for every 1000 impressions
what is pay per click
only pay when click
most common
pay per conversion
only pay when actualy purchase is made
why use auctions for online advertising pricing
there are a lot of advertisers and the value of an impression varies depending on advertiser.
having these difference prices helps increase profit
so auctions are a price discovery mechanism
what are some things that you need to consider in a multiple item auction
multiple item auction is more complex than single item
items can be identicle, substitute, complemented
some bidders may only want one thing and some can take whatever
it takes n x 2^m numbers to specify bidders values
there are (n + 1) ^m allocations
n = bidders and m = items
when is an allocation efficent
if the items are allocated to bidders who value them the most
what is the vcg mechanism Vickrey-Clarke-Groves
the Vickrey-Clarke-Groves mechanism
makes people tell the truth about how much they want something
maxmizing total value
payments based on external impact
each player reports their valuation
auctioneer chooses the most effecient allocation
winner pays the ‘harm’ they caused to others
ie A values item at 100$
B values item at 80$
A gets the item but pays 80$
watch a video on vcg applied to an example
what are the pros of vcg
maximizes social welface (efficent)
truthful
what are the cons of vcg
sometimes impractiable/ intractable
if there are n bidders and m items then you would need to calcuate 2^m combinations for item preferences
finding (n+1) ^m allocations is also difficult
so its expensive
search enginners doing use it bc its expensive and confusing
what auction model does google use
click through rate
what is click through rate
the probability that someone will click on ur ad based on how many people it was shown too
clicks/ total impressions
how does google find click through rate
historic click frequency and secrete formula
quality of landing page
how does generalized second price auction work
each bidder says their bid amount
then each bid is ranked based on bid amount and sometimes quality
the bidder then pays the next highest amount bid from their own
ie
a pays b’s $ and b pays c’s $
determin position by quality * bid
it is not a truthful bid and agents change their strategy based on others bids
