Quality-weighted second-price auctions for advertisements

One or more computer-storage media having computer-executable instructions embodied thereon that, when executed, perform a method of ranking and pricing advertisements that are presented on a results page using quality weighting in a generalized second-price auction, the method comprising:

• identifying a set of advertisements that is relevant to a search query;
• determining a rank score for each advertisement in the set of advertisements, the rank score determined based on a quality score of the each advertisement and a bid price of the each advertisement, wherein the quality score is based in part on a satisfied click-through-rate for the each advertisement;
• ranking the set of advertisements based on the rank scores;
• and
• determining a cost-per-click (CPC) for the each advertisement in the set of advertisements, wherein for a given advertisement in the set of advertisements:
• when the given advertisement is an exact match to the search query, determining the CPC based on a quality score of an advertisement ranked directly below the given advertisement, a bid price of the advertisement ranked directly below the given advertisement, and a quality score of the given advertisement, and
• when the given advertisement is a broad match to the search query, determining the CPC based on a probability that an advertisement ranked directly below the given advertisement will receive a click, a probability that a user's need is met given there is a click on the advertisement ranked directly below the given advertisement, a bid price of the advertisement ranked directly below the given advertisement, and a probability that the given advertisement will receive a click.

One or more computer-storage media having computer-executable instructions embodied thereon that, when executed, perform a method of determining a number of advertisements to be presented in an advertisement block on a results page in a generalized second-price auction, the method comprising:

• defining an expected satisfied revenue when n top-ranked advertisements are presented in the advertisement block;
• defining a user cost when n top-ranked advertisements are presented in the advertisement block;
• defining an objective function that generates a solution based on the expected satisfied revenue and the user cost for each n top-ranked advertisements in the advertisement block;
• for each value of n, using the objective function to generate a solution;
• determining the n value associated with the solution having the highest value, wherein the n value associated with the solution having the highest value is equal to the number of advertisements to be presented in the advertisement block on the results page such that expect satisfied revenue is maximized and user cost is minimized;
• and
• communicating the determined number of advertisements to a publisher who presents the determined number of advertisements in the advertisement block on the results page.