Strategic Bidding in Hybrid CPC/CPM Auctions
AbstractWebsites increasingly allow advertisers to choose whether to bid for advertising on a per-impression or per-click basis. We present the first analysis of this new hybrid auction market. The conventional wisdom in this industry is that brand advertisers (e.g., Coca-Cola) will bid for impressions, while direct response advertisers (e.g., Amazon.com) will bid for clicks. We find that in an auction setting similar to that used by Facebook and Google, brand advertisers may have an incentive to bid for clicks, while simultaneously lowering their click through rates. We suggest a variant on the current hybrid auction used in practice to incent brand advertisers to bid for impressions, which leaves the seller of online advertising weakly better off.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 08-25.
Length: 21 pages
Date of creation: Oct 2008
Date of revision: Oct 2008
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Web page: http://www.NETinst.org/
Advertising; Auctions; Internet Marketing; Search Advertising;
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