Utility Maximizer or Value Maximizer: Mechanism Design for Mixed Bidders in Online Advertising

by   Hongtao Lv, et al.
Shandong University
Shanghai Jiao Tong University
Alibaba Group

Digital advertising constitutes one of the main revenue sources for online platforms. In recent years, some advertisers tend to adopt auto-bidding tools to facilitate advertising performance optimization, making the classical utility maximizer model in auction theory not fit well. Some recent studies proposed a new model, called value maximizer, for auto-bidding advertisers with return-on-investment (ROI) constraints. However, the model of either utility maximizer or value maximizer could only characterize partial advertisers in real-world advertising platforms. In a mixed environment where utility maximizers and value maximizers coexist, the truthful ad auction design would be challenging since bidders could manipulate both their values and affiliated classes, leading to a multi-parameter mechanism design problem. In this work, we address this issue by proposing a payment rule which combines the corresponding ones in classical VCG and GSP mechanisms in a novel way. Based on this payment rule, we propose a truthful auction mechanism with an approximation ratio of 2 on social welfare, which is close to the lower bound of at least 5/4 that we also prove. The designed auction mechanism is a generalization of VCG for utility maximizers and GSP for value maximizers.


page 1

page 2

page 3

page 4


Robust Auction Design in the Auto-bidding World

In classic auction theory, reserve prices are known to be effective for ...

Auto-bidding Equilibrium in ROI-Constrained Online Advertising Markets

Most of the work in auction design literature assumes that bidders behav...

Bayesian Calibrated Click-Through Auction

We study information design in click-through auctions, in which the bidd...

Fair Online Advertising

Online advertising platforms are thriving due to the customizable audien...

Approximately Optimal Mechanism Design

Optimal mechanism design enjoys a beautiful and well-developed theory, a...

An Analysis of Selection Bias Issue for Online Advertising

In online advertising, a set of potential advertisements can be ranked b...

Toward Controlling Discrimination in Online Ad Auctions

Online advertising platforms are thriving due to the customizable audien...

Please sign up or login with your details

Forgot password? Click here to reset