Auto-bidding plays an important role in online advertising and has become a crucial tool for advertisers and advertising platforms to meet their performance objectives and optimize the efficiency of ad delivery. Advertisers employing auto-bidding only need to express high-level goals and constraints, and leave the bid optimization problem to the advertising platforms. As auto-bidding has obviously changed the bidding language and the way advertisers participate in the ad auction, fundamental investigation into mechanism design for auto-bidding environment should be made to study the interaction of auto-bidding with advertisers. In this paper, we formulate the general problem of incentive mechanism design for ROI-constrained auto-bidding, and carry out analysis of strategy-proof requirements for the revenue-maximizing and profit-maximizing advertisers. In addition, we provide a mechanism framework and a practical solution to guarantee the incentive property for different types of advertisers.
@article{arxiv.2012.02652,
title = {Incentive Mechanism Design for ROI-constrained Auto-bidding},
author = {Bin Li and Xiao Yang and Daren Sun and Zhi Ji and Zhen Jiang and Cong Han and Dong Hao},
journal= {arXiv preprint arXiv:2012.02652},
year = {2020}
}