Search Bidding Systems Face Criticism
Jan 18, 2006, 6:00 AM
Anti-adware crusader Ben Edelman, has joined with two other academics to author a paper that criticizes Google's and Yahoo!'s keyword bidding system for allegedly taking advantage of less sophisticated search marketers. The paper, "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," suggests that marketers would sometimes do better when bidding to underestimate the price-per-click that they're willing to pay. The paper was authored by Michael Ostrovsky, assistant professor of economics at Stanford Business School; Michael Schwarz, RWFJ Scholar at the University of California, Berkeley, and Faculty Research Fellow at the National Bureau of Economic Research; and Edelman, a doctoral candidate in economics at Harvard University. "At the very least, we want to educate advertisers about the fact that in some sense they are being taken advantage of. Under the current mechanism, if they don't think carefully about their bidding strategies, they can end up paying a lot more to the search engines than they need to," Ostrovsky said in a statement.