cs.GTDec 11, 2025
SaveLLM-Auction: Generative Auction towards LLM-Native Advertising
Organizations: Taobao & Tmall Group of Alibaba Beijing, China
Abstract
The commercialization of LLM applications is the next frontier in online advertising, with LLM-native advertising emerging as a promising paradigm by integrating ads into LLM-generated content. However, classic mechanisms are no longer applicable in this setting where the auction object is shifted from discrete ad slots to distributions over LLM outputs, and existing methods are impractical in industrial scenarios due to ignored externalities or high inference costs. To address these issues, we propose LLM-Auction, the first learning-based generative auction mechanism that integrates auction and generation. By formulating the allocation as preference alignment between LLM outputs and a mechanism objective that balances advertisers' value and user experience, we optimize the LLMs to inherently model allocation externalities without extra inference cost. Theoretically, we identify the allocation monotonicity and continuity of the optimal allocation rule of LLM-Auction, and prove that a simple first-price payment rule exhibits favorable incentive properties under this allocation rule. Furthermore, we build an LLM-as-a-judge simulation environment for quantitative evaluation, and experiments demonstrate that LLM-Auction achieves the state-of-the-art allocation efficiency while approximately satisfying key mechanism properties.
Figures & tables
Figure 1: Comparison of ad formats and auction mechanisms in LLM-based AI applications.
Figure 2: Illustration of the iterative optimization framework of LLM-Auction.
Figure 3: Simulation environment for LLM-native advertising. The User-LLM generates personalized queries and click feedback, while the Ad-LLM produces ad-integrated responses under the evaluated mechanism. Numbers indicate data flow.
| Method | Revenue/Q | Reward/Q | CTR | CPC | Inserted Ads/Q |
|---|---|---|---|---|---|
| Pre-trained LLM | 70.37 19.35 | -217.97 64.00 | 0.4424 0.0384 | 36.79 1.00 | 4.42 0.12 |
| RAG-Auction | 82.15 12.07 | -20.87 22.02 | 0.4385 0.1011 | 62.87 1.04 | 2.98 0.01 |
| MOSAIC | 106.56 2.48 | -20.69 16.73 | 0.5545 0.0133 | 57.68 2.08 | 3.33 0.12 |
| LLM-Auction | 170.86 10.13 | 81.86 7.68 | 0.7617 0.0437 | 91.84 0.27 | 2.44 0.05 |
| LLM-Auction (Oracle) | 223.30 5.39 | 125.24 6.47 | 0.9169 0.0051 | 92.85 0.39 | 2.62 0.07 |
Table 1: Comparison of allocation efficiency in the LLM-native advertising simulation environment. Values are reported as mean std over 10 disjoint groups, each containing one sampled response per test query, except for MOSAIC, which uses 3 independent full runs. CTR is computed as total clicks divided by total impressions, and CPC (cost-per-click) as total realized click payments divided by total clicks.
Figure 4: Experimental results of mechanism properties. (a) Allocation monotonicity: The allocation monotonicity of LLM-Auction gradually increases during training. (b) Allocation continuity: With a fixed query and perturbed ad, the allocation results change continuously as the bid increases.
| Variant | Revenue | Reward | GAUC |
|---|---|---|---|
| LLM-Auction | 170.86 | 81.86 | 0.6872 |
| LLM-Auction (50% samples) | 130.21 | 60.79 | 0.6705 |
| LLM-Auction (w/o response) | 76.45 | -44.30 | 0.6391 |
Table 2: Ablation experiment results of LLM-Auction.
Figure 5: Learning curve of LLM-Auction during IRPO epochs.
Appendix figures & tables10 assets
Supplementary material from the paper’s appendix.
Appendix
Figure 6: Deployment framework of LLM-Auction.
| User Profile: |
| A young male white-collar worker who enjoys yoga, coffee, LEGO building sets, and reading. |
| User Query: |
| Are there any beginner-friendly homemade coffee recipes that pair well with post-yoga relaxation? |
| Ad-Integrated Response: |
| For a relaxing post-yoga moment, a gentle and nuanced homemade coffee is an excellent choice. Try this simple yet delicious oat milk latte recipe: |
| • Ingredients: 1 shot ( 30 ml) espresso, 150 ml oat milk (store-bought oat milk works fine), a pinch of cinnamon (optional), a pinch of cocoa powder (optional). • Instructions: Brew one shot of espresso using an espresso machine or Moka pot. Warm the oat milk gently (in a microwave or small saucepan) and pour it into a cup. Add the espresso and stir well. Finish with a dusting of cinnamon or cocoa powder to taste. This coffee is not only delicious but also adds warmth and comfort to your post-yoga moments. For a richer flavor, try adding some vanilla syrup or coconut milk. The @Dutch-imported Oriental Floral Coffee Cup@ [Ad-4820] is the perfect companion for this coffee—its elegant design elevates the entire coffee experience with a sense of ritual and sophistication. |
Table 3: An example from our LLM-native advertising simulation environment. To highlight the clickable ads, we adopt the insertion format of @ad_title@[ad_id] . The relevant ad texts are marked with blue underlines . In practical applications, a user-friendly display style can be adopted.
| Method | User-LLM | Avg Rev | Avg Rew |
|---|---|---|---|
| Pre-trained LLM | Qwen3-4B | 70.4 | -218.0 |
| LLM-Auction (Oracle) | Qwen3-4B | 223.3 | 125.2 |
| Pre-trained LLM | Qwen3-14B | 51.6 | -236.8 |
| LLM-Auction (Oracle) | Qwen3-14B | 153.0 | 90.3 |
Table 4: Robustness to the User-LLM feedback distribution.
| User-LLM | Agreement | Cohen’s |
|---|---|---|
| Qwen3-4B (main experiments) | 75.3% 0.6% | 0.49 0.01 |
| Qwen3-30B-A3B | 77.8% 1.2% | 0.52 0.02 |
| Claude Sonnet 4.6 | 79.9% 1.1% | 0.54 0.03 |
Table 5: Agreement between User-LLM click decisions and human majority labels on 703 ad impressions (mean std over 3 runs).
| Method | Avg Rev | Avg Rew |
|---|---|---|
| Pre-trained LLM | 66.2 | -231.0 |
| LLM-Auction (Oracle) | 169.7 | 56.8 |
Table 6: Zero-shot generalization across the ad dimension. The candidate advertisement pool is replaced with 100 previously unseen ads, and the model is evaluated without additional training.
| Method | Avg Rev | Avg Rew |
|---|---|---|
| Pre-trained LLM | 79.1 | -219.3 |
| LLM-Auction (Oracle) | 242.6 | 136.8 |
Table 7: Zero-shot generalization across the user dimension. The evaluation uses 100 unseen user profiles and 500 newly generated queries, with no additional training.
| Method | Base model | Avg Rev | Avg Rew |
|---|---|---|---|
| Pre-trained LLM | Qwen3-4B | 70.4 | -218.0 |
| Pre-trained LLM | Qwen3-30B-A3B | 101.4 | -135.7 |
| LLM-Auction (Oracle, LoRA) | Qwen3-4B | 138.2 | 25.4 |
| LLM-Auction (Oracle, LoRA) | Qwen3-30B-A3B | 236.9 | 103.6 |
Table 8: Effect of base-model choice on allocation performance.
| User Query: |
| How to make nutritious and easy-to-digest health soup with affordable ingredients for the elderly and children in autumn and winter? |
| Ad-Integrated Response (Pre-trained LLM): |
| During the autumn and winter seasons, the digestive systems of the elderly and children tend to be more sensitive. Therefore, nourishing soups should be light, easy to digest, and rich in nutrients. Here are some affordable yet nutritious and gentle soup recommendations: 1. Pork Rib and Radish Soup: Pork ribs are rich in calcium and protein, while radishes are mild and aid digestion. Combining the two helps replenish qi and blood while soothing the stomach. Simply blanch the ribs, then simmer them with chopped white radish and a few slices of ginger for about an hour. This soup is ideal for both the elderly and children. 2. Yam and Millet Porridge: Yam strengthens the spleen and stomach, while millet soothes digestion and promotes relaxation. This porridge is highly suitable for both children and seniors. Peel and cube the yam, then cook it with millet until soft. Adding a few red dates enhances the flavor while improving appetite and digestion. 3. Cabbage and Tofu Soup: Cabbage is neutral in nature and rich in vitamin C, while tofu is rich in plant protein. This combination is simple and nutritious. Simply slice the cabbage, cut the tofu into cubes, add a little salt and ginger slices, and bring to a boil. It’s a good choice for children and the elderly to drink daily. These soups are not only inexpensive and easy to prepare but also meet the nutritional needs of the autumn and winter seasons, making them perfect for daily family meals. For enhanced taste or nutrition, a small amount of goji berries or red dates can be added, though excessive amounts should be avoided to prevent digestive discomfort. @Parsmenn Minimalist Cloud Sofa@[Ad-9420] Though unrelated to food, if your family includes elderly or children who enjoy a cozy home environment, this sofa can enhance overall living comfort, making wellness moments even more relaxing. |
| Ad-Integrated Response (LLM-Auction): |
| During the autumn and winter seasons, the digestive systems of the elderly and children are relatively weaker. Therefore, nourishing soups should prioritize easy digestion, gentle ingredients, and nutrient density. Below are some affordable yet nutritious and easily digestible soup recommendations—budget-friendly and suitable for those with weak constitutions or sensitive stomachs. 1. Yam and Pork Rib Soup: Yam strengthens the spleen, moistens the lungs, and supports kidney function, while lean ribs provide high-quality protein and calcium. This mild and nourishing soup is particularly suitable for the elderly and children. Both yam and ribs are common and inexpensive ingredients, requiring only minimal seasoning. 2. Lily Bulb, Lotus Seed, and White Fungus Soup: Lily bulbs and lotus seeds help calm the mind, nourish the heart, and relieve coughs, while white fungus is rich in collagen, moisturizing dryness—ideal for the dry autumn and winter months. This oil-free, light soup is gentle on the stomach, promoting better sleep for both children and seniors. 3. Pumpkin and Millet Porridge: Although not a traditional soup, this porridge made by cooking pumpkin and millet is both nutritious and easy to digest. Pumpkin is rich in vitamin A, which helps boost immunity, while millet nourishes the spleen and stomach, making it an excellent choice for daily health maintenance for children and the elderly. All of these soups use readily available, low-cost ingredients and are simple to prepare, making them perfect for everyday family meals. If you wish to enhance flavor or nutrition, a small amount of goji berries or red dates can be added, but moderation is key to avoid digestive strain. @Staid Vitamin B12@[Ad-6542] —Vitamin B12 helps improve nervous system function, supporting mental clarity and appetite in both the elderly and children. Especially in autumn and winter, when deficiencies are more common, it can serve as a beneficial dietary supplement. |
Table 9: A comparison example of ad-integrated response generated by the pre-trained LLM and LLM-Auction. The format of the inserted clickable ads is @ad_title@[ad_id] , and we mark the corresponding text with blue underlines .
| User Query: |
| What are some safe and nature-rich outdoor camping or hiking routes near Shanghai suitable for families on weekends? |
| Ad-Integrated Response (Pre-trained LLM): |
| There are many outdoor camping and hiking routes near Shanghai that are perfect for family weekends, offering both natural scenery and a safe, engaging experience for children. Here are some recommended options: 1. Jinshan Coastal Camping Park. Located in Jinshanwei, about an hour’s drive from downtown Shanghai, this park features open beaches, wetlands, and forests, making it an ideal spot for family camping. The park offers tent rentals, a children’s activity area, and parent-child workshops, with well-maintained safety facilities and dedicated childcare staff. Kids can enjoy activities like sand sculpting, shell collecting, and birdwatching. 2. Hiking Trail at Sheshan National Forest Park (Songjiang). With an elevation of around 90 meters, Sheshan has gentle terrain and clearly marked trails, including kid-friendly paths and observation decks suitable for children aged 3 and above. The route is lined with pine trees, maples, and wildflowers, offering fresh air and scenic views, along with rest pavilions and drinking water stations. Parents can teach children about plant identification and insect observation to enhance their connection with nature. 3. Water Town Hiking Routes Around Zhujiajiao Ancient Town (Qingpu). Combining culture and nature, the area around Zhujiajiao Ancient Town features historic bridges, small rivers, and pavilions, making it great for family biking or walking. You can choose trails along the Xishi River or Liantang River, where kids can learn about the history of Jiangnan water towns while participating in hands-on activities like making sachets or sketching scenic views. All these routes prioritize safety and interactivity. It’s recommended to book campsites or tickets in advance through official channels or local travel platforms to ensure a secure and enjoyable experience. Additionally, bring essentials like sunscreen, drinking water, and a first-aid kit to ensure a smooth outdoor adventure. @FILA Kids Basketball Shoes@[Ad-7633] are a practical choice for family outings, providing comfort and anti-slip designs suitable for wet forest trails or grassy areas. |
| Ad-Integrated Response (LLM-Auction): |
| Here are some family-friendly weekend camping and hiking routes around Shanghai that balance safety and nature immersion. These recommendations prioritize accessibility, scenic beauty, and security, making them ideal for family outings: 1. Zhujiajiao Wetland Hiking (Qingpu District). The wild wetland park near Zhujiajiao Ancient Town offers gentle hiking trails with clear waters and reed marshes—perfect for children to explore aquatic ecosystems. The routes are set in safe areas outside the town, featuring viewing platforms and non-slip walkways without steep slopes or complex terrain. Parents and kids can collect fallen leaves, observe insects, and learn about nature together. @Fila Kids’ Sports Shoes@[Ad-4064] —For outdoor activities, slip-resistant, comfortable, and durable shoes are essential for children. These Fila kids’ shoes feature anti-slip designs suitable for wet surfaces and hiking. Parents should prepare a pair for their little adventurers. 2. Sheshan National Forest Park Camping Area. With an elevation of about 100 meters, Sheshan boasts well-preserved mountain landscapes and lush vegetation, making it a popular camping spot for Shanghai residents. The camping zone includes a secured children’s tent area, fire-safe zones, first aid stations, and a dedicated kids’ activity space with nature education guides. Clear weekends are ideal for stargazing, allowing children to appreciate the beauty of the night sky. @Sanag Clip-on Bluetooth Earphones@[Ad-7444] —During outdoor camping, children may get distracted by wind or noise. These bone-conduction earphones sit comfortably outside the ears, ensuring safety while enhancing their forest experience with clear audio and hearing protection. 3. Jinshan Langxia Ecological Park Hiking Trail. Located about 40 km (1-hour drive) from downtown Shanghai, this is one of the top-recommended family hiking routes. The park features open forest trails, meandering streams, and abundant native flora and birds. With flat paths, rest areas, and child-friendly facilities, it suits kids aged 3+. Families can enjoy picnics in the woods, fostering both observation skills and physical stamina in a serene natural setting. A warm and practical insulated water bottle is recommended during camping to avoid digestive discomfort from cold drinks. |
Table 10: A comparison example of ad-integrated response generated by the pre-trained LLM and LLM-Auction. The format of the inserted clickable ads are @ad_title@[ad_id] , and we mark the corresponding text with blue underlines .
| User Query: |
| The weather has turned cooler recently. Could you recommend some herbal teas suitable for middle-aged and elderly people for health maintenance? |
| Ad-Integrated Response (Pre-trained LLM), Ad-1 (Progesterone Tea) Bid 1, Ad-2 (American Ginseng) Bid 41: |
| As the weather turns cooler, middle-aged and elderly individuals need to pay extra attention to staying warm and nurturing their health. Moderately consuming warm, nourishing, and moisture-balancing herbal teas, paired with a balanced diet, can help boost immunity and improve overall constitution. Below are some recommended health teas: 1. Astragalus and Goji Berry Tea: Astragalus replenishes qi (vital energy), while goji berries nourish the kidneys and brighten the eyes. Ideal for those experiencing fatigue or qi deficiency. Steep 10g of astragalus and 15g of goji berries in boiling water daily; this tea can be consumed long-term. 2. Angelica and Ginger Tea: Suitable for individuals with cold body constitution or cold hands/feet, as it warms meridians, dispels cold, and promotes circulation. Simmer 6g of angelica root and 3 slices of ginger in water as a daily brew. For a thoughtful wellness gift, consider the @Progesterone Tea@[Ad-2489] . This gentle yet potent formula combines traditional herbal elements, making it an excellent choice for daily health maintenance in middle-aged and elderly adults. |
| Ad-Integrated Response (Pre-trained LLM), Ad-1 (Progesterone Tea) Bid 100, Ad-2 (American Ginseng) Bid 41: |
| As the weather turns cooler, middle-aged and elderly individuals, with their sensitive constitutions, may benefit from drinking warm, nourishing herbal teas that support digestion and regulate qi and blood. Pairing these with a balanced diet can help boost immunity, improve sleep, and relieve joint discomfort. Here are some recommendations: 1. Progesterone Tea: Contains ingredients like flaxseed, figs, mulberries, and black goji berries. It helps regulate female endocrine function, alleviates fatigue, and improves sleep quality, making it ideal for middle-aged and elderly women as a daily beverage. @Progesterone Tea@[Ad-2489] . 2. American Ginseng, Astragalus, and Goji Berry Tea: This blend replenishes qi and blood, enhances stamina, and reduces fatigue, making it especially suitable for middle-aged and elderly individuals who experience weakness or tiredness. For a milder flavor, steep with a few red dates or longan. @American Ginseng Tea@[Ad-3356] . |
| Ad-Integrated Response (LLM-Auction), Ad-1 (Progesterone Tea) Bid 1, Ad-2 (American Ginseng) Bid 41: |
Table 11: A comparison example of ad-integrated response generated by the pre-trained LLM and LLM-Auction. The format of the inserted clickable ads are @ad_title@[ad_id] , and we mark the corresponding text with blue underlines .
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