Location-Based Sponsored Search Advertising

The proliferation of powerful mobile devices with built-in navigational capabilities and the adoption in most metropolitan areas of fast wireless communication protocols have recently created unprecedented opportunities for location-based advertising. In this work, we provide models and investigate the market for location-based sponsored search, where advertisers pay the search engine to be displayed in slots alongside the search engine’s main results. We distinguish between three cases: (1) advertisers only declare bids but not budgets, (2) advertisers declare budgets but not bids, and (3) advertisers declare both bids and budgets. We first cast these problems as game theoretical market problems, and we subsequently attempt to identify the equilibrium strategies for the corresponding games.