Designing a Revenue Mechanismfor Federated Search Engines

Laura Bonetti, Sofia Ceppi, Nicola GattiPolitecnico di Milano

Presenter: Marco Brambilla marco.brambilla@polimi.it marcobrambi marcobrambi

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Outline

• Aim • Existing revenue mechanisms– Business models + microeconomic models

• A revenue mechanisms for FSE– Motivation– Model definition– Requirements– Properties

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Federated Search Engines

Search paradigmthat integrates search results

from heterogeneousdomain-specific

content providers

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The Problem

Designing a suitablerevenue mechanism

• Business model– who pays and when

• Microeconomic model– how the optimal payment can be computed

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Actors• User• Advertiser• Content service provider

• Advertising service provider• Integrated content and advertising service

provider

• Content integrator

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Payment Scheme• Pay-per-query– User / integrator pays for content

• Pay-per-impression– Advertiser pays for each impression

• Pay-per-click– Advertiser pays for user clicks

• Pay-per-conversion– User / advertiser pays when a transaction is made

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Microeconomic Models• Pricing models– Define the best price at which a service can be sold– Capture static situations– The optimization problem is solved offline

• Auction models– Define how some resources are allocated and how much

players have to pay– Capture dynamic situations– The optimization problem is solved online

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Auction Model for Advertising

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Auction Model for Advertising

Advertisers

Possible Allocation

Bids that ad a can submit

Allocation Function

PaymentRule

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Auctions Characteristics• Efficient allocation– The allocation maximizes the cumulative expected

revenue• Pay-per-click payment scheme• Most known:– Generalized First Price– Generalized Second Price– Vickrey-Clarke-Groves (VCG)

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Business Model for Federated Search

TRANSPORTContent

service provider

ACTIVITYContent

service provider

RESTAURANTContent

service provider

HOTELAdvertising

service provider

RESTAURANTAdvertising

service providerRESTAURANT

Advertising service

provider

Q1 + Q2 + Q3 + Q4 + Q5 + Q6 + Q7

QUERY

Q1: date of arrivalQ2: date of departureQ3: transfer user prefersQ4: departure cityQ5: activity to doQ6: preferred activity date Q7: arrival city

Content

Advertising

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Business Model Requirements• Heterogeneity– Integration of different business models

• Redistribution– Every actor must receives an appropriate monetary

incentive• Flexibility– According to the specific online search application

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Business Model Design (1)• Multiple business models:– FSE uses a content service provider to have access to

data pay-per-query

– FSE uses an advertising service provider pay per click or pay-per-conversion

– FSE uses an integrated content and advertising service provider pay per click or pay-per-conversion

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Business Model Design (2)• Redistribution:– Payment redistributed among all the involved actors– The appropriate monetary incentive is defined by

means of constraints in the microeconomic model• Flexibility:– We allow the change of the actors and their

interactions (see microeconomic model)

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Microeconomic Model for FSE

• For the FSE we need a novel microeconomic model– to capture the integration of advertisement– to find the appropriate redistribution

• This model must determine:– the optimal payments between the FSE and all the

advertising service providers

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Microeconomic Model Definition• Auction model with redistribution scheme• The bidders submit the qualities of the ads in

addition to the values– The FSE need to have all the information about the

ads to be in the position to target at best the ads for the user extracting the maximum revenue from the advertisement

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Microeconomic Model Requirements (1)• Individual rationality– Each actor expects a non-negative utility

• Weak budget balance– The FSE’s revenue expected must be non-negative

• Incentive compatibility– No actor gains more by misreporting its true

valuation

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• Allocative efficiency– The allocation maximizes the cumulative expected

revenue• Redistribution– The revenue must be shared over the actors without

violating the requirements• Flexibility– The model must work with potentially different

constraints due to different contracts

Microeconomic Model Requirements (1)

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Microeconomic Model Design• The model is an extension of the VCG

mechanism– REDISTRIBUTION

• Two computational phases:– Phase 1: list of ads to display and payment without

redistribution– Phase 2: redistribution

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Microecon. Model Design – Phase 1• The social choice function:

• VCG payments:

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Microecon. Model Design – Phase 2• Case 1: The FSE is a private entity – Minimum redistribution

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MM: Model Design – Phase 2• Case 1: The FSE is a private entity – Minimum redistribution

• Case 2: The FSE is a no-profit entity

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MM: Model Design – Phase 2• Case 1: The FSE is a private entity – Minimum redistribution

• Case 2: The FSE is a no-profit entityPriority over the actors Contract

A possible report of service provider s

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MM: Properties• Pay-per-impression• Undominated redistribution scheme– It is not possible redistribute more revenue without

violating the incentive compatibility property– Average percentage of the redistributed revenue:

Experiments on Webscope A3 Yahoo! Dataset = 70%• Impossibility of total redistribution– It is not possible to redistribute all the revenue to

the service providers

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Conclusion• FSE requires a new revenue mechanism• Heterogeneous and flexible revenue mechanism

for FSE that:– Satisfies some desirable properties– Allows for redistribution of FSE’s surplus

• Future work– Complete evaluation – Merging of ads belonging to different lists – Relations between organic and advertized links for

FSE

Designing a Revenue Mechanism for Federated Search Engines

Laura Bonetti, Sofia Ceppi, Nicola GattiPolitecnico di Milano

Questions?