Optimising Trade-offs Among Stakeholders in Ad Auctions

We examine trade-offs among stakeholders in ad auctions. Our metrics are the revenue for the utility of the auctioneer, the number of clicks for the utility of the users and the welfare for the utility of the advertisers. We show how to optimize linear combinations of the stakeholder utilities, showing that these can be tackled through a GSP auction with a per-click reserve price. We then examine constrained optimization of stakeholder utilities. We use simulations and analysis of real-world sponsored search auction data to demonstrate the feasible trade-offs, examining the effect of changing the allowed number of ads on the utilities of the stakeholders. We investigate both short term effects, when the players do not have the time to modify their behavior, and long term equilibrium conditions. Finally, we examine a combinatorially richer constrained optimization problem, where there are several possible allowed configurations (templates) of ad formats. This model captures richer ad formats, which allow using the available screen real estate in various ways. We show that two natural generalizations of the GSP auction rules to this domain are poorly behaved, resulting in not having a symmetric Nash equilibrium or having one with poor welfare. We also provide positive results for restricted cases.Comment: 18 pages, 10 figures, ACM Conference on Economics and Computation 201

CUSTOMER JOURNEYS ON ONLINE PURCHASE: SEARCH ENGINE, SOCIAL MEDIA, AND THIRD-PARTY ADVERTISING

As the technologies and better practices become broadly available, companies are moving more quickly from a single-click or search-only model toward greater sophisticated models of informing and influencing the customer online shopping journeys. This study scrutinizes the predictive relationship between three referral channels, search engine, social medial, and third-party advertising, and online consumer search and purchase. The results derived from vector autoregressive models suggest that the three channels have differential predictive relationship with sale measures. Such differential relationship is even more pronounced for the long-term, accumulative effects. The predictive power of the three channels is also considerably different in referring customers among competing online shopping websites. This study offers new insights for IT and marketing practitioners in respect to how different channels perform in order to optimize the media mix and overall performance

Experimental Evaluation of Sponsored Search Auction Mechanisms

The theory of sponsored search has been developing rapidly although with disagreement in scientific circles on answers to some basic questions about sponsored search. This study focuses on two of these questions, namely, if a search engine seeks to maximize profits, 1) what should its pricing policy be and 2) what should its ranking policy be. This paper uses experiments with economically motivated human subjects to address these questions. We evaluate six different sponsored search auction formats with two different pricing policies (Pay-per-transaction & Pay-per-click) and three different ranking policies (Rank by relevance, Rank by click-through rate, & Rank by both relevance and click-through rate). Our results suggest that Pay-per-click is superior and the reason behind its superiority is behavioral in nature whereas the ranking policy has significant effect on search engine revenue and advertiser profit

Multi-Click Attribution in Sponsored Search Advertising: An Empirical Study in Hospitality Industry

Sponsored search advertising has become a dominant form of advertising for many firms in the hospitality vertical, with Priceline and Expedia each spending in excess of US$2 billion in online advertising in 2015. Given the competition in online advertising, it has become essential for advertisers to know how effectively to allocate financial resources to keywords. Central to budget allocation for keywords is an attribution of revenue (from converted ads) to the keywords generating consumer interest. Conventional wisdom suggests several ways to attribute revenues in the sponsored search advertising domain (e.g., last-click, first & last-click, or evenly distributed approach). We develop a multi-click attribution methodology using a unique multi-advertiser data set, which includes full advertiser and consumer-level click and purchase information. We add to the literature by developing a two-stage multi-click attribution methodology with a specific focus on sponsored search advertising in the hospitality industry with which we develop a parametric approach to calculate the value function from each stage of the estimation process. Given our multi-advertiser data set, we are able to illustrate the inefficiency of single-click attribution approaches, which undervalue assist clicks while overvaluing converted clicks

Differential Effects of Keyword Selection in Search Engine Advertising on Direct and Indirect Sales

Product sales via sponsored keyword advertising on search engines rely on an effective selection of keywords that describe the offerings. In this study, we consider both the direct sales of the advertised products and indirect sales (i.e., cross-selling) of other products, and examine how specific keywords and general keywords influence these two types of sales differently. We also examine how the cross-selling effects may vary across different types of products (main products and accessories). Our results suggest that the use of specific keywords leans toward improving the direct sales of advertised products, while the use of general keywords leans toward improving the indirect sales of other products. The contribution of keywords to indirect sales is influenced by product type. For main products, the use of specific keywords generates a higher marginal contribution to indirect sales than that of general keywords. For accessory products, the use of general keywords generates a higher marginal contribution to indirect sales than that of specific keywords. The key implication of this study is that sellers focusing on different types of sales (direct or indirect sales) or products (main or accessory products) should consider using different types of keywords in search engine advertising to drive sales

Newspapers and the Internet: friends or foes? : evidence of concentration of choice in Korea

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2010.Cataloged from PDF version of thesis.Includes bibliographical references (p. 27).Does the expansion of the Internet provide opportunities for newspapers to attract more readers, or does it threaten their sustainability by cannibalizing subscription revenue from print circulation? To examine these competing hypotheses, I analyzed a unique data set of the monthly number of clicks on the homepages of the Web sites of four economic newspapers in Korea between 2001 and 2009. Using a unique quasi-experimental observation of the Korean media industry, I illustrated the differential impact of the Internet on leading newspapers and their followers. By attracting people to a common "playground" and providing inference information-namely information on others' decisions-the Internet has a significant impact on consumer choice of information products, reinforcing informational cascades through the inference effect. My findings reveal that since the advent of the Internet, customer preference has consistently been dominated by market leaders, strengthening the brand image of the leaders. This phenomenon will, over time, widen the gap between leading newspaper groups and laggards, providing new opportunities for market leaders only. Thus, my findings point to significant marketing strategies based on consumer choice.by Jun Mo Park.M.B.A

An Empirical Analysis of Search Engine Advertising: Sponsored Search and Cross-Selling in Electronic Markets

The phenomenon of sponsored search advertising – where advertisers pay a fee to Internet search engines to be displayed alongside organic (non-sponsored) web search results – is gaining ground as the largest source of revenues for search engines. Using a unique panel dataset of several hundred keywords collected from a large nationwide retailer that advertises on Google, we empirically model the relationship between different metrics such as click-through rates, conversion rates, bid prices and keyword ranks. Our paper proposes a novel framework and data to better understand what drives these differences. We use a Hierarchical Bayesian modeling framework and estimate the model using Markov Chain Monte Carlo (MCMC) methods. We empirically estimate the impact of keyword attributes on consumer search and purchase behavior as well as on firms’ decision-making behavior on bid prices and ranks. We find that the presence of retailer-specific information in the keyword increases click-through rates, and the presence of brand-specific information in the keyword increases conversion rates. Our analysis provides some evidence that advertisers are not bidding optimally with respect to maximizing the profits. We also demonstrate that as suggested by anecdotal evidence, search engines like Google factor in both the auction bid price as well as prior click-through rates before allotting a final rank to an advertisement. Finally, we conduct a detailed analysis with product level variables to explore the extent of cross-selling opportunities across different categories from a given keyword advertisement. We find that there exists significant potential for cross-selling through search keyword advertisements. Latency (the time it takes for consumer to place a purchase order after clicking on the advertisement) and the presence of a brand name in the keyword are associated with consumer spending on product categories that are different from the one they were originally searching for on the Internet

ONLINE RETAIL KEYWORD CHARACTERISTICS AND SEARCH MARKETING PERFORMANCE

To make judicious budget and resource allocation decisions, it is essential to understand the characteristics and performance of keywords used by target shoppers. Taking the approach of understanding consumers’ information needs, we construct a goal-related keyword characterization framework. Most search keywords exhibit more than one of the following characteristics - retailer specific, brand specific, product specific, feature related, or shopping intention. We analyze search engine ranking, click-through, and revenue data associated with visitor-disclosed search keywords from a top Web-only retailer over one year. Our findings show the interesting impacts of both keyword characteristics and dual-appearance of paid and organic advertisements on search marketing performance. The contributions of the research include a comprehensive search keyword characterization framework, and the analysis of the relationships between keyword characteristics and search performance. These findings have strong implications for search marketing decisions

A Systematic Review on Search Engine Advertising

The innovation of Search Engine Advertising (SEA) was first introduced in 1998. It soon became a very popular tool among practitioners for promoting their websites on the Web and turned into a billion dollar revenue source for search engines. In parallel with its rapid growth in use, SEA attracted the attention of academic researchers resulting in a large number of publications on the topic of SEA. However, no comprehensive review of this accumulated body of knowledge is currently available. This shortcoming has motivated us to conduct a systematic review of SEA literature. Herewith, we searched for and collected 101 papers on the topic of SEA, published in 72 journals from different disciplines and analyzed them to answer the research questions for this study. We have identified the historical development of SEA literature, predominant journals in the publication of SEA research, active reference disciplines as well as the main researchers in the field of SEA. Moreover, we have classified SEA literature into four categories and 10 research topics. We also uncovered a number of gaps in SEA literature and provided future research direction accordingly. Available at: https://aisel.aisnet.org/pajais/vol7/iss3/2