Bid optimization for broad match Ad auctions

Eyal Even Dar, Vahab S. Mirrokni, S. Muthukrishnan, Yishay Mansour, Uri Nadav

Research output: Chapter in Book/Report/Conference proceedingConference contribution

32 Scopus citations

Abstract

Ad auctions in sponsored search support "broad match" that allows an advertiser to target a large number of queries while bidding only on a limited number. While giving more expressiveness to advertisers, this feature makes it challenging to optimize bids to maximize their returns: choosing to bid on a query as a broad match because it provides high profit results in one bidding for related queries which may yield low or even negative profits. We abstract and study the complexity of the bid optimization problem which is to determine an advertiser's bids on a subset of keywords (possibly using broad match) so that her profit is maximized. In the query language model when the advertiser is allowed to bid on all queries as broad match, we present a linear programming (LP)-based polynomial-time algorithm that gets the optimal profit. In the model in which an advertiser can only bid on keywords, ie., a subset of keywords as an exact or broad match, we show that this problem is not approximable within any reasonable approximation factor unless P=NP. To deal with this hardness result, we present a constant-factor approximation when the optimal profit significantly exceeds the cost. This algorithm is based on rounding a natural LP formulation of the problem. Finally, we study a budgeted variant of the problem, and show that in the query language model, one can find two budget constrained ad campaigns in polynomial time that implement the optimal bidding strategy. Our results are the first to address bid optimization under the broad match feature which is common in ad auctions. Copyright is held by the International World Wide Web Conference Committee (IW3C2).

Original languageEnglish (US)
Title of host publicationWWW'09 - Proceedings of the 18th International World Wide Web Conference
PublisherAssociation for Computing Machinery
Pages231-240
Number of pages10
ISBN (Print)9781605584874
DOIs
StatePublished - 2009
Event18th International World Wide Web Conference, WWW 2009 - Madrid, Spain
Duration: Apr 20 2009Apr 24 2009

Publication series

NameWWW'09 - Proceedings of the 18th International World Wide Web Conference

Other

Other18th International World Wide Web Conference, WWW 2009
Country/TerritorySpain
CityMadrid
Period4/20/094/24/09

All Science Journal Classification (ASJC) codes

  • Computer Networks and Communications

Keywords

  • Ad auctions
  • Bid optimization
  • Optimal bidding
  • Sponsored search

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