Adwords with Unknown Budgets and Beyond

TL;DR

This paper addresses the online Adwords problem with unknown advertiser budgets, introducing a randomized algorithm that surpasses the 0.5 competitive ratio barrier and applies to multi-channel traffic scenarios.

Contribution

It presents the first randomized algorithm with a competitive ratio above 0.5 for the unknown-budget Adwords problem and demonstrates its optimality in certain applications.

Findings

Achieves a competitive ratio of at least 0.522

Surpasses the 0.5 barrier for deterministic algorithms

Applicable to multi-channel traffic in online matching

Abstract

In the classic Adwords problem introduced by Mehta et al.\ (2007), we have a bipartite graph between advertisers and queries. Each advertiser has a maximum budget that is known a priori. Queries are unknown a priori and arrive sequentially. When a query arrives, advertisers make bids and we (immediately and irrevocably) decide which (if any) Ad to display based on the bids and advertiser budgets. The winning advertiser for each query pays their bid up to their remaining budget. Our goal is to maximize total budget utilized without any foreknowledge of the arrival sequence (which could be adversarial). We consider the setting where the online algorithm does not know the advertisers' budgets a priori and the budget of an advertiser is revealed to the algorithm only when it is exceeded. A na\"ive greedy algorithm is 0.5 competitive for this setting and finding an algorithm with better performance remained an open problem. We show that no deterministic algorithm has competitive ratio better than 0.5 and give the first (randomized) algorithm with strictly better performance guarantee. We show that the competitive ratio of our algorithm is at least 0.522 but also strictly less than $(1-1/e)$. We present novel applications of budget oblivious algorithms in search ads and beyond. In particular, we show that our algorithm achieves the best possible performance guarantee for deterministic online matching in the presence of multi-channel traffic (Manshadi et al. (2022)).