1. Some sites, such as eBay, Craig’s List or auto trading sites allow advertisers to post their adz directly, either for free, for a fee, or a commission.
2. Display adz are placed on many Web sites. Advertisers pay for the display at a fixed rate per impression (one display of the ad with the download of the page by some user). Normally, a second download of the page, even by the same user, will result in the display of a different ad and is a second impression.
3. On-line stores such as Amazon show adz in many contexts. The adz are not paid for by the manufacturers of the product advertised, but are
selected by the store to maximize the probability that the customer will be interested in the product.
4. Search adz are placed among the results of a search query. Advertisers bid for the right to have their ad shown in response to certain queries, but they pay only if the ad is clicked on. The particular adz to be shown are selected by a complex process, to be discussed in this chapter, involving the search terms that the advertiser has bid for, the amount of their bid, the observed probability that the ad will be clicked on, and the total budget that the advertiser has offered for the service.
Direct Placement of Adz
When advertisers can place adz directly, such as a free ad on Craig’s List or the “buy it now” feature at eBay, there are several problems that the site must deal with. Adz are displayed in response to query terms, e.g., “apartment Palo Alto.” The Web site can use an inverted index of words, just as a search engine does (see Section 5.1.1) and return those adz that contain all the words in the query. Alternatively, one can ask the advertiser to specify parameters of the ad, which are stored in a database. For instance, an ad for a used car could specify the manufacturer, model, color, and year from pull-down menus, so only clearly understood terms can be used. Queryers can use the same menus of terms in
Ranking adz is a bit more problematic, since there is nothing like the links on the Web to tell us which adz are more “important.” One strategy used is “most-recent first.” That strategy, while equitable, is sub ject to abuse, where advertisers post small variations of their adz at frequent intervals.
An alternative approach is to try to measure the attractiveness of an ad. Each time it is displayed, record whether or not the queryer clicked on it. Presumably, attractive adz will be clicked on more frequently than those that are not. However, there are several factors that must be considered in evaluating adz: