Skewed Bidding in Per Per Auction Models of Online Advertising

By
Nikhil Agarwal, Susan Athey, David Yang
American Economic Review.
2009, Vol. 99, Issue 2, Pages 441–447

Online search as well as keyword-based contextual advertising on third-party publishers is primarily priced using pay-per-click (PPC): advertisers pay only when a consumer clicks on the advertisement. Slots for advertisements are auctioned, and per-click bids are weighted by the probability of a click given that the advertisement is displayed (the click-throughrate) in addition to other factors.