Mechanism Design for Mobile Geo-Location Advertising

Mobile geo–location advertising, where mobile ads are targeted based on a user’s location, has been identified as a key growth factor for the mobile market. As with online advertising, a crucial ingredient for their success is the development of effective economic mechanisms. An important difference is that mobile ads are shown sequentially over time and information about the user can be learned based on their movements. Furthermore, ads need to be shown selectively to prevent ad fatigue. To this end, we introduce, for the first time, a user model and suitable economic mechanisms which take these factors into account. Specifically, we design two truthful mechanisms which produce an advertisement plan based on the user’s movements. One mechanism is allocatively efficient, but requires exponential compute time in the worst case. The other requires polynomial time, but is not allocatively efficient. Finally, we experimentally evaluate the trade– off between compute time and efficiency of our mechanisms.