Impact of ROI on Bidding and Revenue in Sponsored Search Advertisement Auctions
نویسندگان
چکیده
In this paper, we discuss how advertisers, by considering minimum return on investment (ROI), change their bidding and, consequently the auctioneer’s revenue in sponsored search advertisement auctions. We analyze the VickreyClarke-Groves (VCG), Generalized Second Price (GSP) and Generalized First Price (GFP) auction mechanisms in that respect. Analytical results are presented for the dominant strategy bidding prices in the Vickrey-ClarkeGroves auction and the ex-post equilibrium locally-envy free prices in the Generalized Second Price auction. The simulation results are presented for all three mechanisms: VCG, GSP, and GFP auctions. We conclude that the impact of considering ROI during bidding varies among different auction mechanisms, changing the traditional assessment of their merits for sponsored search advertisement.
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