Two-stage Auction Design in Online Advertising

Modern online advertising systems often involve a substantial number of advertisers in each auction, which results in scalability issues. To address this challenge, two-stage auctions have been designed and implemented in practice. These auctions enable efficient allocation of ad slots among numerous candidate advertisers in a short response time. This approach employs a fast yet coarse model in the first stage to select a small subset of advertisers, followed by a slow, more refined model to determine the final winners. However, existing two-stage auction mechanisms primarily focus on optimizing welfare, overlooking other critical objectives of the platform, such as revenue.