TY - GEN
T1 - A nash bargaining approach to retention enhancing bid optimization in sponsored search auctions with discrete bids
AU - Kannan, Ramakrishnan
AU - Garg, Dinesh
AU - Subbian, Karthik
AU - Narahari, Y.
PY - 2008
Y1 - 2008
N2 - Bid optimization is now becoming quite popular in sponsored search auctions on the web. Given a keyword and the maximum willingness to pay of each advertiser interested in the keyword, the bid optimizer generates a profile of bids for the advertisers with the objective of maximizing customer retention without compromising the revenue of the search engine. In this paper, we present a bid optimization algorithm that is based on a Nash bargaining model where the first player is the search engine and the second player is a virtual agent representing all the bidders. We make the realistic assumption that each bidder specifies a maximum willingness to pay values and a discrete, finite set of bid values. We show that the Nash bargaining solution for this problem always lies on a certain edge of the convex hull such that one end point of the edge is the vector of maximum willingness to pay of all the bidders. We show that the other endpoint of this edge can be computed as a solution of a linear programming problem. We also show how the solution can be transformed to a bid profile of the advertisers.
AB - Bid optimization is now becoming quite popular in sponsored search auctions on the web. Given a keyword and the maximum willingness to pay of each advertiser interested in the keyword, the bid optimizer generates a profile of bids for the advertisers with the objective of maximizing customer retention without compromising the revenue of the search engine. In this paper, we present a bid optimization algorithm that is based on a Nash bargaining model where the first player is the search engine and the second player is a virtual agent representing all the bidders. We make the realistic assumption that each bidder specifies a maximum willingness to pay values and a discrete, finite set of bid values. We show that the Nash bargaining solution for this problem always lies on a certain edge of the convex hull such that one end point of the edge is the vector of maximum willingness to pay of all the bidders. We show that the other endpoint of this edge can be computed as a solution of a linear programming problem. We also show how the solution can be transformed to a bid profile of the advertisers.
KW - Advertiser retention
KW - Bid optimizers
KW - Internet advertising
KW - Mechanism design
KW - Nash bargaining
KW - Sponsored search auctions
UR - http://www.scopus.com/inward/record.url?scp=54949144412&partnerID=8YFLogxK
U2 - 10.1109/COASE.2008.4626517
DO - 10.1109/COASE.2008.4626517
M3 - Conference contribution
AN - SCOPUS:54949144412
SN - 9781424420230
T3 - 4th IEEE Conference on Automation Science and Engineering, CASE 2008
SP - 1007
EP - 1012
BT - 4th IEEE Conference on Automation Science and Engineering, CASE 2008
T2 - 4th IEEE Conference on Automation Science and Engineering, CASE 2008
Y2 - 23 August 2008 through 26 August 2008
ER -