On Designing the Optimal Integrated Ad Auction in E-Commerce Platforms

Abstract

Currently, e-commerce platforms integrate ads and organic content into a mixed list for users. While platforms seek to maximize profit from advertisers, organic items enhance user experience. To ensure long-term development, platforms aim to design mechanisms that optimize both revenue and user satisfaction. Current methods rank ads and organic items separately before integrating them. Even if each part is locally optimal, the combined result may not be globally optimal. In this paper, we come up with the Joint Integrated Regret Network (JINTER Net). Unlike traditional methods, which pre-order ads and organic items separately, JINTER Net directly selects from the combined set of candidate ads and organic items to generate an optimal list. This approach aims to optimally balance platform revenue and user experience while satisfying approximate dominant strategy incentive compatibility and individual rationality. We validate the effectiveness of JINTER Net using both synthetic data and real dataset, and our experimental results show that it significantly outperforms baseline models across multiple metrics.