Fraud-sensitive auction mechanism for sponsored search advertising

Linjing Li, Dajun Zeng, Huimin Zhao

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Generalized second-price (GSP) is currently the dominant auction mechanism used in the sponsored search advertising market. However, despite its tremendous commercial success and theoretical optimality, its effectiveness is jeopardized by the severe click frauds conducted by advertisers and third-party publishers and the vicious bidding strategy used by advertisers to exhaust the budget of rivals. In this paper, we analyze the drawbacks of GSP that tolerate or even encourage such negative behaviors (i.e., click fraud and vicious bidding) and propose a dynamic modification of the original GSP mechanism to address these drawbacks. Our modified auction mechanism incorporates budget into slot allocation and payment determination and relates the quality score of an advertisement to the current bid. Our analysis shows that our mechanism can effectively reduce the effects of click fraud and vicious bidding.

Original languageEnglish (US)
Title of host publicationProceedings - 21st Workshop on Information Technologies and Systems, WITS 2011
PublisherJindal School of Management, JSOM
Pages181-186
Number of pages6
StatePublished - 2011
Event21st Workshop on Information Technologies and Systems, WITS 2011 - Shanghai, China
Duration: Dec 3 2011Dec 4 2011

Other

Other21st Workshop on Information Technologies and Systems, WITS 2011
CountryChina
CityShanghai
Period12/3/1112/4/11

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Keywords

  • Fraud
  • GSP
  • Mechanism design
  • Sponsored search advertising
  • Vicious bidding

ASJC Scopus subject areas

  • Information Systems

Cite this

Li, L., Zeng, D., & Zhao, H. (2011). Fraud-sensitive auction mechanism for sponsored search advertising. In Proceedings - 21st Workshop on Information Technologies and Systems, WITS 2011 (pp. 181-186). Jindal School of Management, JSOM.

Fraud-sensitive auction mechanism for sponsored search advertising. / Li, Linjing; Zeng, Dajun; Zhao, Huimin.

Proceedings - 21st Workshop on Information Technologies and Systems, WITS 2011. Jindal School of Management, JSOM, 2011. p. 181-186.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Li, L, Zeng, D & Zhao, H 2011, Fraud-sensitive auction mechanism for sponsored search advertising. in Proceedings - 21st Workshop on Information Technologies and Systems, WITS 2011. Jindal School of Management, JSOM, pp. 181-186, 21st Workshop on Information Technologies and Systems, WITS 2011, Shanghai, China, 12/3/11.
Li L, Zeng D, Zhao H. Fraud-sensitive auction mechanism for sponsored search advertising. In Proceedings - 21st Workshop on Information Technologies and Systems, WITS 2011. Jindal School of Management, JSOM. 2011. p. 181-186
Li, Linjing ; Zeng, Dajun ; Zhao, Huimin. / Fraud-sensitive auction mechanism for sponsored search advertising. Proceedings - 21st Workshop on Information Technologies and Systems, WITS 2011. Jindal School of Management, JSOM, 2011. pp. 181-186
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