Online Ad Slotting With Cancellations

Many advertisers (bidders) use Internet systems to buy advertisements on publishers’ webpages or on traditional media such as radio, TV and newsprint. They seek a simple, online mechanism to reserve ad slots in advance. On the other hand, media publishers (sellers) represent a vast and varying inventory, and they too seek automatic, online mechanisms for pricing and allocating such reservations. In this paper, we present and study a simple model for auctioning such ad slots in advance. A monopolist seller owns a set of slots that it will display at some point T in the future. Until T , bidders arrive sequentially and place a bid, demanding a reservation for one slot out of a set of desired slots. The seller must decide immediately whether or not to grant a reservation. Our model allows the seller to cancel at any time any reservation made earlier. If the seller cancels bidder i’s reservation, i incurs a utility loss amounting to a fraction of its value for the reservation. Our main result is an online mechanism with many desirable properties. Winners have an incentive to be honest and bidding one’s true value dominates any lower bid. Our mechanism’s efficiency (respectively revenue) is within a constant fraction of the a posteriori optimally efficient solution (respectively VCG revenue). Our results make no assumptions about the arrival order or value distribution of bids. They still hold if the items for sale are elements of a matroid, a more general setting than slot allocation, or if bidders have linear (additive) value for a set of slots.