Reservation Exchange Markets for Internet Advertising
Venue
LIPIcs, vol. 55, 142:1-142:13
Publication Year
2016
Authors
Gagan Goel, Stefano Leonardi, Vahab Mirrokni, Afshin Nikzad, Renato Paes-Leme
BibTeX
Abstract
Internet display advertising industry follows two main business models. One model
is based on direct deals between publishers and advertisers where they sign legal
contracts containing terms of fulfillment for a future inventory. The second model
is a spot market based on auctioning page views in real-time on advertising
exchange (AdX) platforms such as DoubleClick's Ad Exchange, RightMedia, or
AppNexus. These exchanges play the role of intermediaries who sell items (e.g.
page-views) on behalf of a seller (e.g. a publisher) to buyers (e.g., advertisers)
on the opposite side of the market. The computational and economics issues arising
in this second model have been extensively investigated in recent times. In this
work, we consider a third emerging model called reservation exchange market. A
reservation exchange is a two-sided market between buyer orders for blocks of
advertisers' impressions and seller orders for blocks of publishers' page views.
The goal is to match seller orders to buyer orders while providing the right
incentives to both sides. In this work we first describe the important features of
mechanisms for efficient reservation exchange markets. We then address the
algorithmic problems of designing revenue sharing schemes to provide a fair
division between sellers of the revenue collected from buyers. A major conceptual
contribution of this work is in showing that even though both clinching ascending
auctions and VCG mechanisms achieve the same outcome from a buyer perspective,
however, from the perspective of revenue sharing among sellers, clinching ascending
auctions are much more informative than VCG auctions.