A Context-Aware Framework for Integrating Ad Auctions and Recommendations

Recently, many e-commerce platforms have favored presenting a mixed list of ads and organic content to users. The widely-used approach separately ranks ads and organic items, then sequentially inserts ads into the list of organic items. However, this method yields sub-optimal results. Firstly, it only ensures that each generated ad and organic item list achieves local optimality, while the predetermined insertion order fails to guarantee global optimality. Secondly, this approach overlooks the mutual effect between organic items and ads, resulting in an incomplete utilization of contextual information. Besides, it cannot prevent strategic behavior by advertisers. Therefore, we propose a context-aware integrated framework to address these issues. This framework applies automated mechanism design to integrated ad auctions for the first time. Specifically, it models ads and organic items simultaneously along with their contextual information and employs a learning-based approach to prevent advertisers from engaging in strategic behavior. Afterward, the framework directly generates a mixed list, enhancing the overall performance. We also propose Transformer encoder-based Integrated Contextual Net work (TICNet) to generate the optimal integrated contextual ad auction. Finally, we validate the effectiveness of TICNet on synthetic and real-world datasets. Our experimental results demonstrate that TICNet significantly outperforms baseline models across multiple metrics.