Keyword Competition and Determinants of Ad Position in Sponsored Search Advertising

Given the significant growth of the Internet in recent years, marketers have been striving for new techniques and strategies to prosper in the online world. Statistically, search engines have been the most dominant channels of Internet marketing in recent years. However, the mechanics of advertising in such a market place has created a challenging environment for marketers to position their ads among their competitors. This study uses a unique cross-sectional dataset of the top 500 Internet retailers in North America and hierarchical multiple regression analysis to empirically investigate the effect of keyword competition on the relationship between ad position and its determinants in the sponsored search market. To this end, the study utilizes the literature in consumer search behavior, keyword auction mechanism design, and search advertising performance as the theoretical foundation. This study is the first of its kind to examine the sponsored search market characteristics in a cross-sectional setting where the level of keyword competition is explicitly captured in terms of the number of Internet retailers competing for similar keywords. Internet retailing provides an appropriate setting for this study given the high-stake battle for market share and intense competition for keywords in the sponsored search market place. The findings of this study indicate that bid values and ad relevancy metrics as well as their interaction affect the position of ads on the search engine result pages (SERPs). These results confirm some of the findings from previous studies that examined sponsored search advertising performance at a keyword level. Furthermore, the study finds that the position of ads for web-only retailers is dependent on bid values and ad relevancy metrics, whereas, multi-channel retailers are more reliant on their bid values. This difference between web-only and multi-channel retailers is also observed in the moderating effect of keyword competition on the relationships between ad position and its key determinants. Specifically, this study finds that keyword competition has significant moderating effects only for multi-channel retailers

Achieving more by saying less? On the Moderating Effect of Information Cues in Paid Search

Research on ad copy design is well-studied in the context of offline marketing. However, researchers have only recently started to investigate ad copies in the context of paid search, and have not yet explored the potential of information cues to enhance customers’ search process. In this paper we analyze the impact of an information cue on user behavior in ad copies. Contrary to prevalent advice, results suggest that reducing the number of words in an ad is not always beneficial. Users act quite differently (and unexpectedly) in response to an information cue depending on their search phrases. In turn, practitioners could leverage the observed moderating effect of an information cue to enhance paid search success. Furthermore, having detected deviating user behavior in terms of clicks and conversions, we provide first indicative evidence of a self-selection mechanism at play when paid search users respond to differently phrased ad copies

Two essays on digital and multi-channel marketing pricing strategy

Pricing is the process whereby a business sets the price at which it will sell its products and must be considered as a core part of the business's marketing plan. In recent years, there has been a growing awareness of the complex nature of price as a determinant of consumer decision making process. Recent research indicates there is no simple explanation of how price influences firm performance and individual consumer purchase decisions. The pricing strategy in traditional brick-and-mortar stores has received consistent attention from both academia and industry. However, as the raising of digital technology, the evolving business circumstance changed, or even re-introduced, many practically and theoretically important questions. Given this importance, the two essays tackle the strategic pricing strategy in the two critical perspectives of marketing — advertising and retailing. In the first essay, I explore the effects of displayed product price on keyword advertising performance in online shopping websites, as well as on consumers’ decision processes. With a hierarchical Bayesian model using a unique data set from a leading electronic shopping platform and a simulated experiment, I empirically test the asymmetric effects of price rank on advertising performances (i.e., click-through rates and conversion rates) in study one and the underlying mechanism in study two. Specifically, I find that consumers tend to click more on extreme price options (i.e., highest or lowest) in the early phases of the purchase funnel, which serve as anchors to evaluate a broad range of options. Clicks at later stages, which tend to convert to purchases, instead are more likely for moderately priced options, which offer a compromise across different product features. The effects of price rank diminish among advertisements sponsoring more specific keywords but grow for those sponsoring more popular keywords. This essay demonstrates that the keyword advertisements provides a context for price comparison, which further influences consumers’ responses toward advertisements. While the first essay focuses on gaining competitiveness through enhancing the price competition in digital advertising context, the second essay focuses on avoiding price competition in multi-channel retailing context through switching the business focus. The second essay explores the causal effects of multi-channel retailer implementing cross-channel price integration. Leveraging a revised pricing policy implemented by one of the leading house appliance retailers, I empirically investigate how cross-channel price integration affects product sales and consumer preferences. This change of cross-channel pricing strategy reveals varying impact across time, products, channels, and customer segments. In the short term, price integration leads to a 14.70% decrease in sales of products without services but a 14.68% increase in sales of products with services. The price integration effect is more positive in the long run, such that sales of products increase by 10.07% without services and 36.07% with services. Further, using a latent class model with zero-inflated Poisson framework, I empirically differentiated the effects of price integration on three consumer segments with different preferences (i.e., lovers, haters and adaptors). The findings of the second essay contribute to the multi-channel pricing literature by providing an empirical examine of the effectiveness of cross-channel price integration and consumer migration. The findings of the two essays contribute to the pricing, keyword advertisements and multi-channel literature, and shed lights on the strategic implications of pricing activities. Specifically, the first essay connects the pricing literature, consumer search and keyword advertising literature by exploring the effects of contrast among displayed product prices in the keyword advertising context. This essay is among the first few to investigate how advertised product price affects advertising performance. The study suggests the advertised product price display two contrasting effects on consumers’ clicking and purchasing behaviors along their purchase funnel. In addition, the research extends understanding of two keyword characteristics by theoretically differentiating keyword specificity and keyword popularity. The second essay connects the multi-channel pricing literature and transaction value literature by empirically examine the effects of retailers implementing cross-channel price integration policy. Advancing prior research on perceived transaction value and multi-channel pricing literature, this research proposes two contrasting mechanisms (i.e., price change and pricing consistency), through which the cross-channel price integration affects the product sales and consumer sales. The empirical findings shed lights on managerial implications to multi-channel retailers

FIRMS? MARKETING STRATEGIES AND CONSUMER RESPONSES IN PLATFORM-BASED E-COMMERCE MARKETS

Ph.DDOCTOR OF PHILOSOPH

The Mediating Role of Popularity Rank on the Relationship between Advertising and In-app Purchase Sales in Mobile Application Market

In the booming industry of mobile application, a new business model has arisen as a lucrative way of monetization, which is characterized by scaling up user base via free distribution and following partial monetization. As a result, popularity rank and in-app purchase revenue are increasingly emphasized. In this context, understanding the relation among popularity rank, in-app purchase sales, and advertising is essential to optimal marketing decisions. For this purpose, this research investigates how advertising influences in-app purchase sales via popularity rank. Through our empirical analysis of a mobile game data collected on a daily basis, we show advertising expenditure not only improves popularity rank, but also increases in-app purchase sales. In addition, we demonstrate that mobile advertising effect on in-app purchase sales is fully mediated by popularity rank

The Impact Of Online Sponsored Search Advertising On Consumer And Seller Strategies

Sponsored search advertising has emerged as an important and significant forum for advertisers, accounting for 40% of all advertising spending online. The unique features of sponsored search advertising - the nature of consumer search as well as the pricing mechanisms employed - differentiate it from traditional advertising formats, and raise many interesting questions regarding consumers' search and purchase behavior, sellers' advertising strategies, and the ensuing market dynamics. However, despite the robust growth in sponsored search advertising, research on its implications is limited. My dissertation, comprising three essays, seeks to fill this gap. In addition to examining the effects of sponsored search advertising on consumers and sellers, I also investigate the validity of theories developed for traditional media in an emerging online sponsored search context. The first essay focuses on the impact of a seller's sponsored search advertising strategies, including its rank in the sponsored listing, the unique selling proposition (USP) employed in its advertisement text/creative, and competitive market dynamics on the performance of the focal seller's advertisement. Drawing upon prior research on consumer search and directional markets, I propose a model of the consumer search process in the sponsored search context and conduct an empirical study to test the research model. The results validate the research hypothesis that the search listing can act as a consumer filtering mechanism and competitive intensity within adjacent ranks has a significant impact on the seller's performance. The second essay employs consumer search and quality signaling theories from information systems, marketing, and economics to understand the impact of the informational cues contained in the sponsored search listing about sellers' relative advertising expenditure on consumer search and purchase behavior. Contrary to conventional wisdom, I find that the unique format of the sponsored search listing significantly increases the strength of the advertising signal vis-à-vis the price signal. In addition, I find that the risk attitude of consumers has a significant impact on the valence of these different information cues in the online setting. The third essay examines market outcomes in directional markets such as sponsored search and comparison shopping advertising. Specifically, I focus on comparison shopping advertising where advertising not only informs consumers about price and quality but also directs consumer search. I find that the relationship between a firm's price, quality, and advertising intensity in this market is strikingly different from that in traditional markets, a result attributable to the differential impact of price and quality on an advertiser's conversion rates and profit margins. Overall, these studies provide crucial insights into consumer behavior in online sponsored search markets. These findings have significant implications for firms, as well as for the market makers. Insights from these studies will enable practitioners to develop appropriate advertising strategies and online intermediaries to optimize the design of online sponsored search markets

Factors Influence Ongoing Flow Of Customers To E-Commerce Website And Impact On Firm Performance: Web Hosting Industry

Kajian ini bertujuan untuk meninjau perhubungan di antara tiga pembolehubah strategi promosi iaitu pengubahsuaian enjin carian (SEO), rangkaian gabungan, dan perkenalan melalui oral (WOM) kepada trafik laman Web, bagi industri Web hosting. The purpose of this research was to investigate the influence of three promotion strategies variables, search engine optimization (SEO), affiliate networks, and word-of-mouth (WOM) on Website traffic in the context of Web host industry

Keyword Segmentation, Campaign Organization, and Budget Allocation in Sponsored Search Advertising

Sponsored search advertising, where search providers allow advertisers to participate in a real-time auction and compete for ad slots on search engine results pages (SERPs), is currently one of the most popular advertising channels by marketers. Some domains such as Amazon.com allocate in millions of dollars a month to their sponsored search campaigns. Considering the amount of money allocated to sponsored search as well as the dynamic nature of keyword advertising process, the campaign budget planning decision is a non-trivial task for advertisers. Budget constrained advertisers must consider a number of factors when deciding how to organize campaigns, how much budget to allocate to them, and which keywords to bid on. Specifically, they must decide how to spend budget across planning horizons, markets, campaigns, and ad groups. In this thesis, I develop a simulation model that integrates the issues of keyword segmentation, campaign organization, and budget allocation in order to characterize different budget allocation strategies and understand their implications on search advertising performance. Using the buying funnel model as the basis of keyword segmentation and campaign organization, I examine several budget allocation strategies (i.e., search Volume-based, Cost-based, and Clicks-based) and evaluate their performance implications for firms that may pursue different marketing objectives based on industry and or product/service offerings. I evaluate the simulation model using four fortune 500 companies as cases and their keyword advertising data obtained from Spyfu.com. The results and statistical analysis shows significant improvements in budget utilization using the above-mentioned allocation strategies over a Baseline strategy commonly used in practice. The study offers a unique insight into the budget allocation problem in sponsored search advertising by leveraging a theoretical framework for keyword segmentation, campaign management, and performance evaluation. It also provides insights for advertiser on operational issues such as keyword categorization and campaign organization and prioritization for improved performance. The proposed simulation model also contributes a valid experimental environment to test further decision scenarios, theoretical frameworks, and campaign allocation strategies in sponsored search advertising

Spillover Effects of Management Companies in the Vtuber Market

학위논문(석사) -- 서울대학교대학원 : 경영대학 경영학과, 2021.8. 윤혜리.Increasing usage of social media has given subsequent birth to micro-celebrities, or social media influencers (SMIs). Despite the fact that SMIs function as key opinion-leaders in society and the market, little is known about what traits make an SMI popular in the first place. While SMIs are generally considered to gain popularity from rock-bottom through individual endeavors alone, we find an exceptional media sector consisting of virtual YouTubers (vtubers). A vtuber, unlike the usual human YouTuber, is an artificially created figure strictly managed by sponsoring companies from the beginning of his/her debut. Finding a similarity between sponsor-vtuber relationships and parent-child relationships within brand extensions, we ran a random effects model against 560 company-owned vtubers to check whether similar spillover effects can be observed in a social media context as well. Our research yielded positive results, suggesting the existence of persistent spillover effects based on parent-brand popularity. An additional time series analysis was conducted against the weekly changes in the size of management agency influence on their affiliated vtubers. An ARIMA(1,2,0) model demonstrates a high fit with our data, and we find that the model confirms a constantly decreasing size of influence along with the passage of time.소셜미디어의 확산은 마이크로셀레브리티와 소셜미디어 인플루언서(SMI)의 등장을 초래했다. 이미 사회적, 경제적으로 SMI들이 오피니언 리더로서 큰 영향력을 행사하고 있음에도 불구하고 이들이 정확히 어떤 근본적 요인으로 인해 대중적 인기를 얻게 되었는지에 대해 알려진 바는 많지 않다. 많은 경우에 SMI들이 순수하게 자력으로만 팬덤을 구축하는 것으로 간주되는 것에 반해, 필자들은 버츄얼 유튜버(vtuber) 업계로부터 예외적인 상황을 목격했다. 일반적인 인간 유튜버와 달리, vtuber는 데뷔 이전부터 소속사로부터 엄격하게 관리당하고 통제 받는 가상의 디지털 캐릭터들이다. 본 연구에서는 소속사 대 vtuber의 관계가 브랜드 확장 상태의 모브랜드 대 신규 브랜드의 관계와 유사하다는 점에 착안하여, 후자의 경우에 관찰되는 스필오버 효과가 전자에서도 발현되는지 검증하기 위해 소속사와 계약을 맺고 있는 총 560 명의 vtuber에 대해 임의효과 모형을 적용시킨다. 그 결과, 소속사의 영향력이 vtuber의 인기에 대해 긍정적 스필오버 효과가 있음이 확인되었다. 또, 주차별 스필오버 효과 크기의 변화에 대한 시계열 분석을 통해 추세를 예측하는 데 적합한 모형으로 ARIMA(1,2,0) 모델을 특정해내어 시간이 지남에 따라 스필오버 효과가 감소하는 경향성을 지님을 검증했다.Chapter 1. Introduction 1 Chapter 2. Literature Review 3 Chapter 3. Research Model and Hypotheses 14 Chapter 4. Data Analysis and Methodology 18 Chapter 5. Results 21 Chapter 6. Discussion and Conclusion 29 Bibliography 32 Abstract in Korean 41 Appendices 42석