Sponsored Search Auction Considering Combinational Bids with Externalities

Abstract

Sponsored search is a mechanism that shows the appropriate advertisements (ads) according to search queries. The orders and payments of ads are determined by the auction. However, the externalities which give effects to CTR and haven't been considered in some existing works because the mechanism with externalities has high computational cost. In addition, some algorithms which can calculate the approximated solution considering the externalities within the polynomial-time are proposed, however, it assumed that one bidder can propose only a single ad. In this paper, we propose the approximation allocation algorithm that one bidder can offer many ads considering externalities. The proposed algorithm employs the concept of the combinatorial auction in order to consider the combinational bids. In addition, the proposed algorithm can find the approximated allocation by the dynamic programming. Moreover, we prove the computational complexity and the monotonicity of the proposed mechanism, and demonstrate computational costs and efficiency ratios by changing the number of ads, slots and maximum bids. The experimental results show that the proposed algorithm can calculate 0.7-approximation solution even though the full search can't find solutions in the limited times.