Google Research

Truthful auctions for pricing search keywords

ACM Conference on Electronic Commerce (2006), pp. 1-7


We present a truthful auction for pricing advertising slots on a web-page assuming that advertisements for different merchants must be ranked in decreasing order of their (weighted) bids. This captures both the Overture model where bidders are ranked in order of the submitted bids, and the Google model where bidders are ranked in order of the expected revenue (or utility) that their advertisement generates. Assuming separable click-through rates, we prove revenue-equivalence between our auction and the non-truthful next-price auctions currently in use.

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