Amazon scientists win best-paper award for ad auction simulator

Paper introduces a unified view of the learning-to-bid problem and presents AuctionGym, a simulation environment that enables reproducible validation of new solutions.

Opportunities to show ads on the worldwide web are typically sold in real time through advertising auctions, held billions of times per day, every day. A product like Amazon’s Sponsored Display, which participates in auctions on our advertising customers’ behalf, must learn bidding strategies that help our advertisers achieve their goals. If we bid too much, we end up overpaying for the impression opportunity. But if we underbid, we might lose the opportunity. Theory offers little guidance here: in practice, learning to bid requires a lot of trial and error.

At this year’s AdKDD Workshop on computational advertising, at the ACM Conference on Knowledge Discovery and Data Mining (KDD), my colleagues and I won a best-paper award for our presentation of AuctionGym, a simulation environment that enables robust and reproducible evaluation of bandit and reinforcement learning methods for learning bidding strategies for online advertising auctions.

Ad auction flow.png
A typical flow for real-time online advertising auctions. An impression opportunity arises, and an ad exchange sends bid requests to a set of possible bidders, including Amazon Ads. Bidders then decide what to bid, and the winning bidders get to display their advertisements.

We have publicly released the code for AuctionGym, and it is our hope that it will allow researchers as well as practitioners (in computer science, machine learning, economics, and beyond) to gain insights into auction and bidding dynamics and to develop and evaluate novel machine learning approaches that tackle the open problems in the field.

Related content
Amazon Research Award recipient Éva Tardos studies complex theoretical questions that have far-ranging practical consequences.

In the paper, we formalize the problem of learning to bid as off-policy, counterfactual estimation and learning. Within that formalism, we show that most existing solutions adhere to the value-based paradigm, meaning they model the outcome of placing a bid in a specific auction and use that model to make real-time bidding decisions.

This is not the only option: in the paper, we propose alternative formulations of the problem, which leverage policy-based and doubly robust counterfactual estimators. These approaches have the advantage of ironing out biases that can arise when we try to model every single auction outcome: they provide unbiased estimates of the true value a bidding strategy will bring, in expectation.

Auction theory

Auctions are run by entities called ad exchanges, and the mechanisms they implement decide which bidder wins the impression opportunity and how much it costs.

Even for seemingly simple situations with two items and two bidders, the revenue-maximizing auction mechanism remains undiscovered.

Auction mechanisms are well studied in the economics literature and have a long history. The research on this topic typically cares about truthful or incentive-compatible auctions, where bidders are incentivized to report their true valuations for the items being sold. This simplifies the problem setting, as we no longer need to consider strategic misreporting by the bidders.

Famous mechanisms exist to either maximize welfare for auction participants who bid truthfully (the Vickrey-Clarke-Groves auction) or to maximize revenue for the auctioneer (the Myerson auction). Myerson auctions are an example of optimal auction design, a field originated by Roger Myerson, who was awarded a Nobel Prize for it.

Although these well-known mechanisms have been hugely influential and have contributed strongly to our understanding of auction theory, there are still many open problems in practice. Indeed, even for seemingly simple situations with two items and two bidders, the revenue-maximizing auction mechanism remains undiscovered.

The heterogeneity and complexity of present-day online advertising auctions make theoretical analysis difficult. Indeed, theoretical results typically rely on assumptions that rarely hold and are hard to validate in real-world settings. As a result, auction theory only partially informs practical implementations of these systems.

Empirical observation

Moving away from pure theory, we can draw inferences and gain insights through empirical observations. The problem then becomes that experimental data is costly to acquire, and observational data addresses a limited range of questions.

Related content
The 2001 paper was awarded for “foundational work initiating a long and fruitful line of work in approximately revenue-optimal auction design in prior free settings”.

To complicate the picture, the design of many present-day online advertising auctions may in practice encourage strategic bidding. This implies that we should take strategic-bidding behavior into account: when we submit bids to external auctions, as we do with Sponsored Display, we should ensure that we’re using strategies that will help achieve our advertising customers’ goals. But the types of datasets that could be used to evaluate alternative strategies are hard to come by for academic researchers — and offline evaluation methodologies are limited.

AuctionGym provides an alternative way to improve our understanding of auction dynamics and to provide reproducible validation of learning-to-bid methods. It simulates repeated auction rounds in an end-to-end manner, from impression opportunities to impressions and the resulting conversions.

Related content
Amazon Scholar Alexandre Belloni discusses the implications of auction design on digital goods.

In AuctionGym, bidders have private catalogues listing their advertisements, their goals, and their private valuations of those goals. These valuations can be drawn from a prespecified distribution, or they can be based on the bidder’s real data.

AuctionGym comes with implementations of several standard auction mechanisms, but our hope is that it can help identify new mechanisms, learned from data. AuctionGym tracks multiple outcome measures, such as the auctioneer’s revenue; the bidders’ welfare and surplus; return on ad spend (ROAS), an industry-standard efficiency measure; and various notions of bidders’ regret, or how much value bidders miss out on due to suboptimal allocation or bidding decisions.

If you’re interested in learning more, try it yourself at https://github.com/amzn/auction-gym.

Research areas

Related content

IN, HR, Gurugram
Our customers have immense faith in our ability to deliver packages timely and as expected. A well planned network seamlessly scales to handle millions of package movements a day. It has monitoring mechanisms that detect failures before they even happen (such as predicting network congestion, operations breakdown), and perform proactive corrective actions. When failures do happen, it has inbuilt redundancies to mitigate impact (such as determine other routes or service providers that can handle the extra load), and avoids relying on single points of failure (service provider, node, or arc). Finally, it is cost optimal, so that customers can be passed the benefit from an efficiently set up network. Amazon Shipping is hiring Applied Scientists to help improve our ability to plan and execute package movements. As an Applied Scientist in Amazon Shipping, you will work on multiple challenging machine learning problems spread across a wide spectrum of business problems. You will build ML models to help our transportation cost auditing platforms effectively audit off-manifest (discrepancies between planned and actual shipping cost). You will build models to improve the quality of financial and planning data by accurately predicting ship cost at a package level. Your models will help forecast the packages required to be pick from shipper warehouses to reduce First Mile shipping cost. Using signals from within the transportation network (such as network load, and velocity of movements derived from package scan events) and outside (such as weather signals), you will build models that predict delivery delay for every package. These models will help improve buyer experience by triggering early corrective actions, and generating proactive customer notifications. Your role will require you to demonstrate Think Big and Invent and Simplify, by refining and translating Transportation domain-related business problems into one or more Machine Learning problems. You will use techniques from a wide array of machine learning paradigms, such as supervised, unsupervised, semi-supervised and reinforcement learning. Your model choices will include, but not be limited to, linear/logistic models, tree based models, deep learning models, ensemble models, and Q-learning models. You will use techniques such as LIME and SHAP to make your models interpretable for your customers. You will employ a family of reusable modelling solutions to ensure that your ML solution scales across multiple regions (such as North America, Europe, Asia) and package movement types (such as small parcel movements and truck movements). You will partner with Applied Scientists and Research Scientists from other teams in US and India working on related business domains. Your models are expected to be of production quality, and will be directly used in production services. You will work as part of a diverse data science and engineering team comprising of other Applied Scientists, Software Development Engineers and Business Intelligence Engineers. You will participate in the Amazon ML community by authoring scientific papers and submitting them to Machine Learning conferences. You will mentor Applied Scientists and Software Development Engineers having a strong interest in ML. You will also be called upon to provide ML consultation outside your team for other problem statements. If you are excited by this charter, come join us!
US, WA, Seattle
Do you want to re-invent how millions of people consume video content on their TVs, Tablets and Alexa? We are building a free to watch streaming service called Fire TV Channels (https://techcrunch.com/2023/08/21/amazon-launches-fire-tv-channels-app-400-fast-channels/). Our goal is to provide customers with a delightful and personalized experience for consuming content across News, Sports, Cooking, Gaming, Entertainment, Lifestyle and more. You will work closely with engineering and product stakeholders to realize our ambitious product vision. You will get to work with Generative AI and other state of the art technologies to help build personalization and recommendation solutions from the ground up. You will be in the driver's seat to present customers with content they will love. Using Amazon’s large-scale computing resources, you will ask research questions about customer behavior, build state-of-the-art models to generate recommendations and run these models to enhance the customer experience. You will participate in the Amazon ML community and mentor Applied Scientists and Software Engineers with a strong interest in and knowledge of ML. Your work will directly benefit customers and you will measure the impact using scientific tools.
US, MA, Boston
The Artificial General Intelligence (AGI) team is looking for a passionate, talented, and inventive Applied Scientist with a strong deep learning background, to build industry-leading technology with Large Language Models (LLMs) and multi-modal systems. You will support projects that work on technologies including multi-modal model alignment, moderation systems and evaluation. Key job responsibilities As an Applied Scientist with the AGI team, you will support the development of novel algorithms and modeling techniques, to advance the state of the art with LLMs. Your work will directly impact our customers in the form of products and services that make use of speech and language technology. You will leverage Amazon’s heterogeneous data sources and large-scale computing resources to accelerate advances in generative artificial intelligence (GenAI). You are also expected to publish in top tier conferences. About the team The AGI team has a mission to push the envelope in LLMs and multimodal systems. Specifically, we focus on model alignment with an aim to maintain safety while not denting utility, in order to provide the best-possible experience for our customers.
US, MA, Boston
The Artificial General Intelligence (AGI) team is looking for a passionate, talented, and inventive Senior Applied Scientist with a strong deep learning background, to build industry-leading technology with Large Language Models (LLMs) and multimodal systems. Key job responsibilities As a Senior Applied Scientist with the AGI team, you will work with talented peers to lead the development of novel algorithms and modeling techniques, to advance the state of the art with LLMs. Your work will directly impact our customers in the form of products and services that make use of speech and language technology. You will leverage Amazon’s heterogeneous data sources and large-scale computing resources to accelerate advances in generative artificial intelligence (GenAI). About the team The AGI team has a mission to push the envelope in LLMs and multimodal systems, in order to provide the best-possible experience for our customers.
IN, KA, Bengaluru
The Amazon Alexa AI team in India is seeking a talented, self-driven Applied Scientist to work on prototyping, optimizing, and deploying ML algorithms within the realm of Generative AI. Key responsibilities include: - Research, experiment and build Proof Of Concepts advancing the state of the art in AI & ML for GenAI. - Collaborate with cross-functional teams to architect and execute technically rigorous AI projects. - Thrive in dynamic environments, adapting quickly to evolving technical requirements and deadlines. - Engage in effective technical communication (written & spoken) with coordination across teams. - Conduct thorough documentation of algorithms, methodologies, and findings for transparency and reproducibility. - Publish research papers in internal and external venues of repute - Support on-call activities for critical issues Basic Qualifications: - Master’s or PhD in computer science, statistics or a related field - 2-7 years experience in deep learning, machine learning, and data science. - Proficiency in coding and software development, with a strong focus on machine learning frameworks. - Experience in Python, or another language; command line usage; familiarity with Linux and AWS ecosystems. - Understanding of relevant statistical measures such as confidence intervals, significance of error measurements, development and evaluation data sets, etc. - Excellent communication skills (written & spoken) and ability to collaborate effectively in a distributed, cross-functional team setting. - Papers published in AI/ML venues of repute Preferred Qualifications: - Track record of diving into data to discover hidden patterns and conducting error/deviation analysis - Ability to develop experimental and analytic plans for data modeling processes, use of strong baselines, ability to accurately determine cause and effect relations - The motivation to achieve results in a fast-paced environment. - Exceptional level of organization and strong attention to detail - Comfortable working in a fast paced, highly collaborative, dynamic work environment
IN, KA, Bengaluru
Amazon is investing heavily in building a world class advertising business and we are responsible for defining and delivering a collection of self-service performance advertising products that drive discovery and sales. Our products are strategically important to our Retail and Marketplace businesses driving long term growth. We deliver billions of ad impressions and millions of clicks daily and are breaking fresh ground to create world-class products. We are highly motivated, collaborative and fun-loving with an entrepreneurial spirit and bias for action. With a broad mandate to experiment and innovate, we are growing at an unprecedented rate with a seemingly endless range of new opportunities. The ATT team, based in Bangalore, is responsible for ensuring that ads are relevant and is of good quality, leading to higher conversion for the sellers and providing a great experience for the customers. We deal with one of the world’s largest product catalog, handle billions of requests a day with plans to grow it by order of magnitude and use automated systems to validate tens of millions of offers submitted by thousands of merchants in multiple countries and languages. In this role, you will build and develop ML models to address content understanding problems in Ads. These models will rely on a variety of visual and textual features requiring expertise in both domains. These models need to scale to multiple languages and countries. You will collaborate with engineers and other scientists to build, train and deploy these models. As part of these activities, you will develop production level code that enables moderation of millions of ads submitted each day.
US, WA, Seattle
The Search Supply & Experiences team, within Sponsored Products, is seeking an Applied Scientist to solve challenging problems in natural language understanding, personalization, and other areas using the latest techniques in machine learning. In our team, you will have the opportunity to create new ads experiences that elevate the shopping experience for our hundreds of millions customers worldwide. As an Applied Scientist, you will partner with other talented scientists and engineers to design, train, test, and deploy machine learning models. You will be responsible for translating business and engineering requirements into deliverables, and performing detailed experiment analysis to determine how shoppers and advertisers are responding to your changes. We are looking for candidates who thrive in an exciting, fast-paced environment and who have a strong personal interest in learning, researching, and creating new technologies with high customer impact. Key job responsibilities As an Applied Scientist on the Search Supply & Experiences team you will: - Perform hands-on analysis and modeling of enormous datasets to develop insights that increase traffic monetization and merchandise sales, without compromising the shopper experience. - Drive end-to-end machine learning projects that have a high degree of ambiguity, scale, and complexity. - Build machine learning models, perform proof-of-concept, experiment, optimize, and deploy your models into production; work closely with software engineers to assist in productionizing your ML models. - Design and run experiments, gather data, and perform statistical analysis. - Establish scalable, efficient, automated processes for large-scale data analysis, machine-learning model development, model validation and serving. - Stay up to date on the latest advances in machine learning. About the team We are a customer-obsessed team of engineers, technologists, product leaders, and scientists. We are focused on continuous exploration of contexts and creatives where advertising delivers value to shoppers and advertisers. We specifically work on new ads experiences globally with the goal of helping shoppers make the most informed purchase decision. We obsess about our customers and we are continuously innovating on their behalf to enrich their shopping experience on Amazon
US, WA, Seattle
Have you ever wondered how Amazon launches and maintains a consistent customer experience across hundreds of countries and languages it serves its customers? Are you passionate about data and mathematics, and hope to impact the experience of millions of customers? Are you obsessed with designing simple algorithmic solutions to very challenging problems? If so, we look forward to hearing from you! At Amazon, we strive to be Earth's most customer-centric company, where both internal and external customers can find and discover anything they want in their own language of preference. Our Translations Services (TS) team plays a pivotal role in expanding the reach of our marketplace worldwide and enables thousands of developers and other stakeholders (Product Managers, Program Managers, Linguists) in developing locale specific solutions. Amazon Translations Services (TS) is seeking an Applied Scientist to be based in our Seattle office. As a key member of the Science and Engineering team of TS, this person will be responsible for designing algorithmic solutions based on data and mathematics for translating billions of words annually across 130+ and expanding set of locales. The successful applicant will ensure that there is minimal human touch involved in any language translation and accurate translated text is available to our worldwide customers in a streamlined and optimized manner. With access to vast amounts of data, cutting-edge technology, and a diverse community of talented individuals, you will have the opportunity to make a meaningful impact on the way customers and stakeholders engage with Amazon and our platform worldwide. Together, we will drive innovation, solve complex problems, and shape the future of e-commerce. Key job responsibilities * Apply your expertise in LLM models to design, develop, and implement scalable machine learning solutions that address complex language translation-related challenges in the eCommerce space. * Collaborate with cross-functional teams, including software engineers, data scientists, and product managers, to define project requirements, establish success metrics, and deliver high-quality solutions. * Conduct thorough data analysis to gain insights, identify patterns, and drive actionable recommendations that enhance seller performance and customer experiences across various international marketplaces. * Continuously explore and evaluate state-of-the-art modeling techniques and methodologies to improve the accuracy and efficiency of language translation-related systems. * Communicate complex technical concepts effectively to both technical and non-technical stakeholders, providing clear explanations and guidance on proposed solutions and their potential impact. About the team We are a start-up mindset team. As the long-term technical strategy is still taking shape, there is a lot of opportunity for this fresh Science team to innovate by leveraging Gen AI technoligies to build scalable solutions from scratch. Our Vision: Language will not stand in the way of anyone on earth using Amazon products and services. Our Mission: We are the enablers and guardians of translation for Amazon's customers. We do this by offering hands-off-the-wheel service to all Amazon teams, optimizing translation quality and speed at the lowest cost possible.
US, WA, Seattle
Amazon.com strives to be Earth's most customer-centric company where customers can shop in our stores to find and discover anything they want to buy. We hire the world's brightest minds, offering them a fast paced, technologically sophisticated and friendly work environment. Economists at Amazon partner closely with senior management, business stakeholders, scientist and engineers, and economist leadership to solve key business problems ranging from Amazon Web Services, Kindle, Prime, inventory planning, international retail, third party merchants, search, pricing, labor and employment planning, effective benefits (health, retirement, etc.) and beyond. Amazon Economists build econometric models using our world class data systems and apply approaches from a variety of skillsets – applied macro/time series, applied micro, econometric theory, empirical IO, empirical health, labor, public economics and related fields are all highly valued skillsets at Amazon. You will work in a fast moving environment to solve business problems as a member of either a cross-functional team embedded within a business unit or a central science and economics organization. You will be expected to develop techniques that apply econometrics to large data sets, address quantitative problems, and contribute to the design of automated systems around the company. About the team The International Seller Services (ISS) Economics team is a dynamic group at the forefront of shaping Amazon's global seller ecosystem. As part of ISS, we drive innovation and growth through sophisticated economic analysis and data-driven insights. Our mission is critical: we're transforming how Amazon empowers millions of international sellers to succeed in the digital marketplace. Our team stands at the intersection of innovative technology and practical business solutions. We're leading Amazon's transformation in seller services through work with Large Language Models (LLMs) and generative AI, while tackling fundamental questions about seller growth, marketplace dynamics, and operational efficiency. What sets us apart is our unique blend of rigorous economic methodology and practical business impact. We're not just analyzing data – we're building the frameworks and measurement systems that will define the future of Amazon's seller services. Whether we're optimizing the seller journey, evaluating new technologies, or designing innovative service models, our team transforms complex economic challenges into actionable insights that drive real-world results. Join us in shaping how millions of businesses worldwide succeed on Amazon's marketplace, while working on problems that combine economic theory, advanced analytics, and innovative technology.
GB, London
Are you looking to work at the forefront of Machine Learning and AI? Would you be excited to apply cutting edge Generative AI algorithms to solve real world problems with significant impact? The AWS Industries Team at AWS helps AWS customers implement Generative AI solutions and realize transformational business opportunities for AWS customers in the most strategic industry verticals. This is a team of data scientists, engineers, and architects working step-by-step with customers to build bespoke solutions that harness the power of generative AI. The team helps customers imagine and scope the use cases that will create the greatest value for their businesses, select and train and fine tune the right models, define paths to navigate technical or business challenges, develop proof-of-concepts, and build applications to launch these solutions at scale. The AWS Industries team provides guidance and implements best practices for applying generative AI responsibly and cost efficiently. You will work directly with customers and innovate in a fast-paced organization that contributes to game-changing projects and technologies. You will design and run experiments, research new algorithms, and find new ways of optimizing risk, profitability, and customer experience. In this Data Scientist role you will be capable of using GenAI and other techniques to design, evangelize, and implement and scale cutting-edge solutions for never-before-solved problems. Key job responsibilities - Collaborate with AI/ML scientists, engineers, and architects to research, design, develop, and evaluate cutting-edge generative AI algorithms and build ML systems to address real-world challenges - Interact with customers directly to understand the business problem, help and aid them in implementation of generative AI solutions, deliver briefing and deep dive sessions to customers and guide customer on adoption patterns and paths to production - Create and deliver best practice recommendations, tutorials, blog posts, publications, sample code, and presentations adapted to technical, business, and executive stakeholder - Provide customer and market feedback to Product and Engineering teams to help define product direction About the team Diverse Experiences Amazon values diverse experiences. Even if you do not meet all of the preferred qualifications and skills listed in the job description, we encourage candidates to apply. If your career is just starting, hasn’t followed a traditional path, or includes alternative experiences, don’t let it stop you from applying. Why AWS Amazon Web Services (AWS) is the world’s most comprehensive and broadly adopted cloud platform. We pioneered cloud computing and never stopped innovating — that’s why customers from the most successful startups to Global 500 companies trust our robust suite of products and services to power their businesses. Work/Life Balance We value work-life harmony. Achieving success at work should never come at the expense of sacrifices at home, which is why we strive for flexibility as part of our working culture. When we feel supported in the workplace and at home, there’s nothing we can’t achieve in the cloud. Inclusive Team Culture Here at AWS, it’s in our nature to learn and be curious. Our employee-led affinity groups foster a culture of inclusion that empower us to be proud of our differences. Ongoing events and learning experiences, including our Conversations on Race and Ethnicity (CORE) and AmazeCon (gender diversity) conferences, inspire us to never stop embracing our uniqueness. Mentorship and Career Growth We’re continuously raising our performance bar as we strive to become Earth’s Best Employer. That’s why you’ll find endless knowledge-sharing, mentorship and other career-advancing resources here to help you develop into a better-rounded professional.