Aggregators and Contextual Effects in Search Ad Markets

Allocation and pricing of ad slots in search ad markets is typically done through a Generalized Second Price (GSP) auction, which assumes that the click-through rate (CTR) of an ad displayed in a particular position depends only on the identity of the ad and the position it is displayed in. In particular, it is assumed that there are no contextual effects, where the CTR of an ad depends on the other ads displayed with it. We argue that such effects do exist. In particular, we discuss how the economics of ad aggregation may lead to ad aggregators imposing a negative contextual effect on the CTR of advertisers listed below them. We perform an experiment where we intervene in the auction to vary the position of selected aggregators relative to other advertisers. We then measure CTR on ads controlling for ad identity and position to quantify the magnitude of the contextual effect of being listed below an aggregator. In addition we describe the result of the intervention on search engine revenue, which is consistent with an increase in advertiser social welfare.

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In  WWW Workshop on Targeting and Ranking for Online Advertising

Publisher  Association for Computing Machinery, Inc.
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