  Most search engines sell slots to place advertisements on the search results
page through keyword auctions. Advertisers offer bids for how much they are
willing to pay when someone enters a search query, sees the search results, and
then clicks on one of their ads. Search engines typically order the
advertisements for a query by a combination of the bids and expected
clickthrough rates for each advertisement. In this paper, we extend a model of
Yahoo's and Google's advertising auctions to include an effect where repeatedly
showing less relevant ads has a persistent impact on all advertising on the
search engine, an impact we designate as the pollution effect. In Monte-Carlo
simulations using distributions fitted to Yahoo data, we show that a modest
pollution effect is sufficient to dramatically change the advertising rank
order that yields the optimal advertising revenue for a search engine. In
addition, if a pollution effect exists, it is possible to maximize revenue
while also increasing advertiser, and publisher utility. Our results suggest
that search engines could benefit from making relevant advertisements less
expensive and irrelevant advertisements more costly for advertisers than is the
current practice.
