Google Research

When Does Improved Targeting Increase Revenue?

Proceedings of the 24th International Conference on the World Wide Web (WWW) (2015), pp. 462-472

Abstract

In second-price auctions with symmetric bidders, we find that improved targeting via enhanced information disclosure decreases revenue when there are two bidders and increases revenue if there are at least four bidders. With asymmetries, improved targeting increases revenue if the most frequent winner wins less than 30.4% of the time, but can decrease revenue otherwise. We derive analogous results for position auctions. Finally, we show that revenue can vary non-monotonically with the number of bidders who are able to take advantage of improved targeting.

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