Sponsored Search Auctions with Rich Ads

Abstract: The generalized second price (GSP) auction has served as the core selling mechanism for sponsored search ads for over a decade. However, recent trends expanding the set of allowed ad formats---to include a variety of sizes, decorations, and other distinguishing features---have raised critical problems for GSP-based platforms. Alternatives such as the Vickrey-Clarke-Groves (VCG) auction raise different complications because they fundamentally change the way prices are computed. In this paper we report on our efforts to redesign a search ad selling system from the ground up in this new context, proposing a mechanism that optimizes an entire slate of ads globally and computes prices that achieve properties analogous to those held by GSP in the original, simpler setting of uniform ads. A careful algorithmic coupling of allocation-optimization and pricing-computation allows our auction to operate within the strict timing constraints inherent in real-time ad auctions. We report performance results of the auction in Yahoo's Gemini Search platform.