2008/02/14 by Sudhir Kumar Singh, Singh, Sudhir Kumar, Vwani Roychowdhury +2
Business, Management and Accounting · Computer Science · Decision Sciences · #Auction Theory and Applications #Computational Complexity (cs.CC) #Computer Science and Game Theory (cs.GT) #Consumer Market Behavior and Pricing #Data Structures and Algorithms (cs.DS) #FOS: Computer and information sciences #Game Theory and Applications #cs.CC #cs.DS #cs.GT
paper · pdf · doi:10.48550/arxiv.0802.1957
33 pages, 10 figures, new results added, substantially revised
openalex publication_date 2008/02/14 · arxiv created 2008/07/21 · arxiv updated 2009/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We initiate the study of an interesting aspect of sponsored search advertising, namely the consequences of broad match-a feature where an ad of an advertiser can be mapped to a broader range of relevant queries, and not necessarily to the particular keyword(s) that ad is associated with. Starting with a very natural setting for strategies available to the advertisers, and via a careful look through the algorithmic lens, we first propose solution concepts for the game originating from the strategic behavior of advertisers as they try to optimize their budget allocation across various keywords. Next, we consider two broad match scenarios based on factors such as information asymmetry between advertisers and the auctioneer, and the extent of auctioneer's control on the budget splitting. In the first scenario, the advertisers have the full information about broad match and relevant parameters, and can reapportion their own budgets to utilize the extra information; in particular, the auctioneer has no direct control over budget splitting. We show that, the same broad match may lead to different equilibria, one leading to a revenue improvement, whereas another to a revenue loss. This leaves the auctioneer in a dilemma - whether to broad-match or not. This motivates us to consider another broad match scenario, where the advertisers have information only about the current scenario, and the allocation of the budgets unspent in the current scenario is in the control of the auctioneer. We observe that the auctioneer can always improve his revenue by judiciously using broad match. Thus, information seems to be a double-edged sword for the auctioneer.