Reconciling platform revenue with user experience in LLM advertising motivates a data-centric foundation. We introduce NaiAD, the first comprehensive dataset for LLM-native advertising comprising 58,999 carefully constructed ad-embedded responses paired with user queries. NaiAD is organized around theoretically grounded evaluation metrics that separately and comprehensively capture user and commercial utility. To mitigate the dimensional collinearity of aligned LLMs, we propose a decoupled generation pipeline that produces structurally diverse samples, ranging from responses that explicitly disentangle stakeholder utilities to responses that are uniformly strong or weak across dimensions. We further provide score labels calibrated by a Variance-Calibrated Prediction-Powered Inference (VC-PPI) framework, aligning automated scoring with human annotations. Mechanistic analyses reveal that successful ad integration relies on reasoning paths that cluster into four distinct semantic strategies. Models leveraging NaiAD internalize these strategies to simultaneously improve user and commercial utility, while enabling independent control over these distinct objectives via in-context learning. Together, these results position NaiAD as a foundational infrastructure for developing future LLM-native ad systems.
How to monetize large language models (LLMs) by naturally integrating sponsored content into their responses, known as LLM-native advertising, has recently emerged as a critical problem. However, existing solutions entangle advertising with content generation inside a single model, which is incompatible with modern API-only or workflow-based LLM applications and inevitably compromises the original response quality. To address this, we propose PILA, which reformulates ad insertion as a conditional response rewriting problem and decouples it from the upstream service as a lightweight sidecar module. PILA is model-agnostic and can be seamlessly integrated with existing LLM services without modifying the base model or its workflow. It also exposes a controllable trade-off between user-side naturalness and ad-side exposure, offering a practical interface for downstream pricing and deployment. Experiments across diverse upstream models show that \pila consistently improves ad effectiveness while preserving response quality, highlighting its promise as a practical solution for LLM-native advertising.
LLM-native advertising embeds sponsored content directly into model-generated responses, shifting the unit of sale from a fixed slot to a moment within an evolving conversation. Existing LLM ad-auction mechanisms primarily operate within a single response, settling the winner but not the timing. The extension is nontrivial: with one native insertion opportunity per session, the stopping time depends on bids, coupling timing with allocation, so static truthfulness arguments no longer apply. We propose the LLM-based Optimal Stopping Dynamic Auction (LLM-OSDA), a dynamic cost-per-click auction that integrates Bellman optimal stopping, winner allocation, and envelope pricing. A bid-independent LLM layer estimates contextual click quality and seamlessly renders the winning ad, while bids enter only the committed auction mechanism. Under an exact Bellman oracle, the expected discounted-click allocation is monotone in each advertiser's bid, and the corresponding envelope payment makes truthful bidding weakly dominant in expectation. For practical deployment, a learned StopNet approximates the Bellman action values. We show that its decisions differ from the optimal policy only near the stopping boundary and bound the resulting incentive loss in terms of its approximation error. Experiments on a simulated conversational advertising corpus show that LLM-OSDA improves net revenue by 11 percent over the strongest fixed-timing baseline while maintaining comparable user retention. Code is at https://github.com/2025Fang2025/llm-osda.
Recommendation systems power engagement and monetization across feeds, ads, and short-video platforms, but translating the latest advances in Large Language Models into Recommendation Systems (RecSys) gains remains rare, particularly in advertising and production-scale real-world industry setups. Prior real-world LLM successes typically fall into three buckets: (a) generative retrieval that directly predicts the next items for candidate generation, (b) late-stage re-ranking that uses LLMs, and (c) auxiliary signal enrichment with LLMs. We introduce a complementary paradigm for ads: a fine-tuned open-source LLM used not as a ranker, but as an ads-specific ancillary predictor, forecasting likely advertisers from user profiles and histories. This LLM-driven advertiser prediction augments conventional candidate generation and provides informative priors to downstream ranking. Developed in a large-scale production advertising system, our approach produces substantial offline improvements and measurable online business impact, demonstrating that LLM world knowledge and predictive capacity can be efficiently harnessed. Beyond validating LLMs for ads applications, our results show that targeted ancillary predictions can unlock end-to-end gains across both retrieval and late-stage ranking, offering a practical path to LLM-enhanced recommendation at scale.