Beyond Advertising: Mechanism Design for Platform-Wide Marketing Service "QuanZhanTui"

TL;DR

This paper designs a novel auction mechanism called Liquid Payment Auction (LPA) for platform-wide marketing services, balancing seller welfare and user experience, with theoretical guarantees and superior experimental performance.

Contribution

It introduces the LPA mechanism tailored for QuanZhanTui, addressing multi-objective optimization and seller incentives in platform-wide marketing auctions.

Findings

LPA achieves better seller welfare and platform experience than traditional auctions.

Theoretical properties include optimality and incentive compatibility.

Experimental results show LPA's superior performance in simulated environments.

Abstract

On e-commerce platforms, sellers typically bid for impressions from ad traffic to promote their products. However, for most sellers, the majority of their sales come from organic traffic. Consequently, the relationship between their ad spending and total sales remains uncertain, resulting in operational inefficiency. To address this issue, e-commerce platforms have recently introduced a novel platform-wide marketing service known as QuanZhanTui, which has reportedly enhanced marketing efficiency for sellers and driven substantial revenue growth for platforms. QuanZhanTui allows sellers to bid for impressions from the platform's entire traffic to boost their total sales without compromising the platform's user experience. In this paper, we investigate the mechanism design problem that arises from QuanZhanTui. The problem is formulated as a multi-objective optimization to balance sellers' welfare and platform's user experience. We first introduce the stock-constrained value maximizer model, which reflects sellers' dual requirements on marketing efficiency and platform-wide ROI. Then, we propose the Liquid Payment Auction (LPA), an auction designed to optimize the balanced objectives while accounting for sellers' requirements in the auto-bidding environment. It employs a simple payment rule based on sellers' liquid welfare, providing a clearer link between their investment and total sales. Under mild assumptions, we theoretically prove desirable properties of LPA, such as optimality and incentive compatibility. Extensive experiments demonstrate LPA's superior performance over conventional auctions in QuanZhanTui.