Facebook advertisement bidding
https://adespresso.com/academy/blog/facebook-ads-cost/
In class, we delved deep into how advertisers choose which slots to advertise on and at what price. One of the largest hosts of advertising is Facebook, making up over 95% of its total revenue. Consumers and users alike are curious about how much an advertisement actually costs on Facebook, and unsurprisingly, it depends on a lot of factors. To start, Facebook works like an auction. So the number of other bidders and their bids will affect how much an advertiser has to pay, if it can get the slot at all. In addition, prices adjust depending on the target audience. Interestingly, Facebook’s auction works as follows. Depending on how many slots are available, the highest bidders will win the auction, and they will pay the lowest price possible for them to win the auction. In effect, this is like a nth-price sealed-bid auction.
To analyze Facebook’s advertisement auction bidding strategies, we can use what we’ve learned in class. In this case, bidding truthfully is not a dominant strategy and bidding below the true value may be better. The person who can benefit from bidding lower than his true value is the bidder with the nth highest bid. In this case, by bidding lower than his true value, he can attain positive payoff when he wins. This article was extremely relevant to what discussed and learned in class. It was also easy to follow the article as we have discussed many of the topics introduced in the article.