On the Coordination of Value-Maximizing Bidders

TL;DR

This paper explores a coordination mechanism among auto-bidders in online advertising, demonstrating its advantages over independent bidding through theoretical analysis and simulations.

Contribution

It formalizes a coordination model where only the top-value bidder competes, showing it outperforms independent bidding in value and RoS compliance.

Findings

Coordination mechanism improves total value for auto-bidders.

Coordination outperforms independent bidding in simulations.

Theoretical analysis confirms the robustness of coordination.

Abstract

While the auto-bidding literature predominantly considers independent bidding, we investigate the coordination problem among multiple auto-bidders in online advertising platforms. Two motivating scenarios are: collaborative bidding among multiple bidders managed by a third-party bidding agent, and strategic bid selection for multiple ad campaigns managed by a single advertiser. We formalize this coordination problem as a theoretical model and investigate the coordination mechanism where only the highest-value bidder competes with outside bidders, while other coordinated bidders refrain from competing. We demonstrate that such a coordination mechanism dominates independent bidding, improving both Return-on-Spend (RoS) compliance and the total value accrued for the participating auto-bidders or ad campaigns, for a broad class of auto-bidding algorithms. Additionally, our simulations on synthetic and real-world datasets support the theoretical result that coordination outperforms independent bidding. These findings highlight both the theoretical potential and the practical robustness of coordinated auto-bidding in online auctions.