Polarization trend in sponsored search auctions

Yong Yuan, Daniel Zeng, Huimin Zhao, Jiesi Cheng

Research output: Contribution to conferencePaperpeer-review


Quality score (QS) plays a critical role in sponsored search auctions and in practice is closely related to the historical click-through rate (CTR) of an advertisement. Existing research, however, has not explicitly considered this correlation between QS and historical CTR. In this paper, we strive to bridge this gap. Based on a discrete time-dependent optimal control model, which explicitly captures the CTR-QS correlation, we analyze the optimal positioning strategy and the widely-observed greedy positioning strategy for advertisers. We find that both strategies lead advertisers to monotonically increase or decrease their ranks over time, and thus may result in a polarization trend in sponsored search markets. Our findings can help characterize advertisers' behavior dynamics and also offer valuable insights and suggestions to search engines.

Original languageEnglish (US)
Number of pages6
StatePublished - Jan 1 2012
Event22nd Workshop on Information Technologies and Systems, WITS 2012 - Orlando, FL, United States
Duration: Dec 15 2012Dec 16 2012


Other22nd Workshop on Information Technologies and Systems, WITS 2012
Country/TerritoryUnited States
CityOrlando, FL

ASJC Scopus subject areas

  • Information Systems


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