Russian-funded Facebook ads and auctions
https://www.politico.com/story/2017/09/26/facebook-russia-trump-sanders-stein-243172
In this article, the author talked about the Russian money backed advertisement and the influence on the presidential election. While in class, we generalized the prices to be based on the location of the slots on a page; the higher the slot the higher the price, and vice versa. We didn’t distinguish among different audiences. In reality, the price is also based on how important the audience is to the advertisers. For example, advertisers need to pay more to put their ads in front of the voters in the swing states. Facebook didn’t set the price for specific slots, but the market demand drives the cost up in the auctions to reflect the demand for specific target groups.
The ad auctions also shine lights into Facebook other search engines’ slow response to Russia and extreme group backed ads. There isn’t a team manually screening the ad proposals and setting a price, the market auctions automatically determine which ad slots go to which advisors. Thus, extreme groups that have strong motives and wealthy backers end up able to bid the highest prices and take the ad slots.
This relates to what we learned about the interconnection between advertisement on search engine and auction in class. In an ad auction, we have advertisers who have a value for different advertisement slots, and number of clicks and market clearing prices for the different advertisement slots. The slots with the highest number of clicks get auctioned to the advisor who have the put the highest bid. In a second price auction, the advisor pays the price of the second highest bid. In VCG, the advisor pays the price equivalent to the sacrifice they bring on the rest of the bidders.