Posted Prices Exchange for Display Advertising Contracts

October 31, 2012
Yagil Engel | MSR Advanced Technology Lab

We propose a new market design for display advertising contracts, based on posted prices. Under certain assumptions, posted prices can lead to global market efficiency, while supporting the dynamic nature of this marketplace. However, a posted prices approach requires overcoming two major challenges: (i) the space of possible impression types is exponential in the number of attributes, which is typically large; therefore a complete price space cannot be maintained. (ii) to ensure stability, prices should clear the market (equate demand and supply). This requires means to elicit demand and supply in a way that is reasonably simple yet sufficiently expressive.

To facilitate elicitation, we employ reasonable structural assumptions on the demand; specifically, that advertisers’ utility function exhibits Constant Elasticity of Substitution (CES) and goods are Gross Substitutes, and show how utility functions can be extrapolated by observing advertiser’s demand statements in response to current prices. On the price space side, we define a compact set of market goods, each is a statement over a subset of the attributes, based on current demand. We show how to overcome various consistency problems this could cause. We then show how market clearing prices can be computed efficiently. Finally, we discuss the application of this posted prices approach in the dynamic environment of display advertising (joint work with Moshe Tennenholtz).

Speaker Details

Yagil Engel joined MSR Advanced Technology Lab in Israel as a senior researcher in April 2012; at ATLI he is working on various problems in monetization and on the design of online mechanisms. Yagil completed his PhD in computer science at the University of Michigan in 2008, focusing on multi-attribute preference representation and mechanism design. Prior to that Yagil worked for several years in the software industry on electronic commerce systems, and visited MS LiveLabs for internship in the summer of 2007. More recently, he worked at IBM Research, Haifa, after a two-year postdoc at the Technion, Israel.