Merging Mechanisms for Ads and Organic Items in E-commerce Platforms

Abstract

In contemporary e-commerce platforms, search result pages display two types of items: ad items and organic items. Ad items are determined through an advertising auction system, while organic items are selected by a recommendation system. These systems have distinct optimization objectives, creating the challenge of effectively merging these two components. Recent research has explored merging mechanisms for e-commerce platforms, but none have simultaneously achieved all desirable properties: incentive compatibility, individual rationality, adaptability to multiple slots, integration of inseparable candidates, and avoidance of repeated exposure for ads and organic items. This paper addresses the design of a merging mechanism that satisfies all these properties. We first provide the necessary conditions for the optimal merging mechanisms. Next, we introduce two simple and effective mechanisms, termed the generalized fix mechanism and the generalized change mechanism. Finally, we theoretically prove that both mechanisms offer guaranteed approximation ratios compared to the optimal mechanism in both simplest and general settings.