Sustaining a Good Impression: Mechanisms for Selling Partitioned Impressions at Ad Exchanges

At an ad exchange, impressions are sold to advertisers in real time through an auction mechanism. The traditional mechanism at these exchanges selects a single advertiser whose ad is displayed over the entire duration of an impression, that is, throughout the user's visit. We argue that such a mechanism leads to an allocative inefficiency. Our goal in this paper is to address this efficiency loss by offering mechanisms in which multiple ads can be displayed sequentially over the lifetime of the impression. We consider two plausible settings—one where each auction is individually rational for the advertisers and another where advertisers are better off relative to the traditional mechanism over the long run—and derive an optimal mechanism for each setting. Under the former mechanism, whereas the ad exchange always benefits relative to the traditional mechanism, the advertisers can either gain or lose—we demonstrate both these possibilities. The optimal mechanism for the latter setting is a mutually beneficial mechanism in that it guarantees a win–win for both the parties relative to the traditional mechanism over the long run. Happily, for both the mechanisms, the allocation of ads and the payments from the advertisers are efficiently computable, thereby making them amenable to real-time bidding.

• 저널Information Systems Research · 31(1) · 126–147
• 토픽Consumer Market Behavior and Pricing · Marketing
• DOI10.1287/isre.2019.0878
• 저자Sameer Mehta, Milind Dawande, Ganesh Janakiraman, Vijay Mookerjee