An overview of search advertising I presented in an invited lecture at the New York University Business School in Dec of 2009. I also cover output bidding, a novel search advertising model complementary to the currently dominant form of search adverising, keyword advertising.
1. Search Advertising
Overview
Ali Dasdan, Yahoo!
Disclaimers:
This talk presents the opinions of the author.
Some of the proposals have been submitted as patent applications.
10. Online advertising
Goal:
find the “best match” between an ad
and a context to maximize “value” for
all stakeholders
Context:
browse, search, connect, etc.
Stakeholders
users, advertisers, publishers,
auctioneers
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35. A brief history of keyword
advertising
Early 1990s: Open Text & AltaVista try it but fail.
Feb 1998: GoTo introduces it for paid search.
the idea is from yellowpages
May 1999: GoTo files for a patent application.
Oct 2000: Google introduces AdWords.
after two unsuccessful internal attempts
Jul 2001: GoTo gets patent #6,269,361.
Oct 2001: GoTo renames to Overture.
Apr 2002: Overture sues Google.
May 2002: Google hires Hal Varian as its chief economist.
Mar 2003: Google acquires Applied Semantics & introduces
its AdSense contextual advertising service.
Jul 2003: Yahoo! acquires Overture.
Aug 2004: Yahoo! & Google settle the case out of court.
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38. Cost & performance
measures
Cost measures
CPM: Cost per 1000x impressions
the original model
CPC: Cost per click, pay per click
Yahoo! has been using since 1996.
CPA: Cost per action
action: acquisition, order, engagement
DoubleClick has been using since 1997.
Performance measures
Click thru rate (ctr): P(click|impression)
Conversion rate: P(action|click)
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39. Ranking ads & pricing clicks
Ranking in decreasing r = w * b
by bid: r = b = bid
by expected revenue: r = ctr * b
by performance: r = f(…) * bs
Pricing
generalized second price (gsp):
min price (+ε) to keep the current position
e.g., the ith pays (wi+1*bi+1)/wi+0.01
last position holder to pay a reserve price
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42. Summary of output bidding
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y = f ( x )
Search results
(output)
Search engine Search query
(input)
Keyword (input) bidding is on x.
Output bidding is on y.
Note:
• y >> x in size & context
• y is where innovation happens
43. Review of input & output
Search engine as a mapping:
Output = SE( Input ) y = f( x )
Input: What users give to SEs
a few keywords as a query
very limited (given) context
Output: What SEs produce
lots of data and metadata
far richer context & getting richer
where innovation happens
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44. Intent bidding &
ad association
What do advertisers bid on?
users’ (purchasing) intent
signal for intent: keywords
How do advertisers bid?
associate their ads with keywords
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45. Output bidding proposal
Claims
use output as a far richer signal for
intent
associate ads with output too
Proposal
direct use: Bidding on output explicitly
indirect use: Use of output as part of
input bidding
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46. Output bidding variations
Paid (self) association (PA): Ads with organic results
from the same site
More expressive input bidding:
Output as conditions: Conditions on output parameters
Output as expansion: “Keywords” from output for
keyword bidding
Direct output bidding:
Bid for organic search result, show ad closeby
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Sponsored: Discount on air conditioners
47. Issues to resolve
Mindset – probably the most difficult issue
User interface: New ads as an extension of sponsored results
space or next to target organic result? News ads shown with
mouse over or always on?
Auction modeling: What if an advertiser bids for both input
and output, or multiple outputs? How not to undermine input
bidding revenue with output bidding? What is the role of
organic content publisher in auctions regarding its content?
Search advertising: Should ‘Ace Hardware’ be just a “organic
related site” instead of a “sponsored related site” to ‘Home
Depot’? Should search engines charge for commercial-looking
organic results (local business, shopping, etc.)?
Implementation: How to hide the latency of output
dependence?
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48. Benefits & limitations
Benefits
taking better advantage of content &
search engine investments
better ad targeting and relevance with
richer context
potentially establishing publishers as a
first-class partner to search auctions
Limitations
search engines manipulating their organic
content based on output bids?
Not likely due to potential loss of relevance
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49. Related work
Output bidding
Dasdan (2007) – conceived in early 2006; Dasdan & Gonen
(2008);
Bids on search results
Dasdan (2007); Manavoglu, Popescul, Dom, & Brunk (2008).
Interplay between organic and sponsored results
Ghose & Yang (2009); Katona & Sarvary (2009); Xu, Chen, &
Whinston (2009).
Bids on more parameters of input bidding
Aggarwal, Feldman, & Muthukrishnan (2006); Muthukrishnan
(2009); Benisch, Sadeh, & Sandholm (2008).
Use of top search results for enhancing keyword context
and ad matching
Broder, Ciccolo, Fontoura, Gabrilovich, Josifovski, & Riedel
(2008).
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52. 52
For the query “zappos”, what is the need for the two results
(one organic and one ad) for zappos.com? Should the ‘similar
to this’ sites stay organic?
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Rich ad
Organic result
For the query “charles schwab”, what is the need for the two
results (one organic and one ad) for schwab.com?
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What are the potential uses of the box on the right, which allows
a peek into the destination page?
55. Short list
Theory and practice of output bidding
Fusing organic & sponsored processing
pipelines
Bringing publishers to search auction
Interactions between organic and
sponsored results
New opportunities for ads in search results
pages
Ads for shopping lists (e.g., ebay results)
Life with a few, very powerful players
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56. Conclusions
Web search and advertising at the
intersection of many scientific
disciplines
Lots of challenges but huge rewards
uncertainty, scale
Too early to call the field advanced
beyond reach
so help invent its future
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63. Experimental Results 1/2
Hypothesis #1: An ad has higher
CTR if it is correlated to an organic
result.
Correlation: Being from the same site
Dataset: Queries from 3 days of Yahoo!
Web Search logs
Result: 3x & 10x CTR increases for non-
navigational and navigational queries
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64. Experimental Results 2/2
Hypothesis #2: Organic results do
contain terms to match for (input
bidding) ads.
Dataset: 100 queries producing no or
few ads
Result: 5x increase in total number of
ads, some queries with lots of ads
See the next figure
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