Bid generation for advanced match in sponsored search.

ABSTRACTSponsored search is a three-way interaction between advertisers, users, and the search engine. The basic ad selection in sponsored search, lets the advertiser choose the exact queries where the ad is to be shown. To increase advertising volume, many advertisers opt into advanced match, where the search engine can select additional queries that are deemed relevant for the advertiser's ad. In advanced match, the search engine is effectively bidding on the behalf of the advertisers. While advanced match has been extensively studied in the literature from the ad relevance perspective there is little work that discusses how to infer the appropriate bid value for a given advanced match. The bid value is crucial as it affects both the ad placement in revenue reordering and the amount advertisers are charged in case of a click. We propose a statistical approach to solve the bid generation problem and examine two information sources: the bidding behavior of advertisers, and the conversion data. Our key finding suggests that sophisticated advertisers' bids are driven by many factors beyond clicks and immediate measurable conversions, likely capturing the value chain of an ad display ranging from views, clicks, profit margins, etc., representing the total ROI from the advertising.