Keyword portfolio optimization in paid search advertising

• Markowitz portfolio theory can be applied to determine budget allocation in paid online search advertising. Risk-adjusted performance advertising improved through diversification negatively correlated keywords. Average keyword popularity growth estimated from Google Trends is strongly related the standard deviation of for each (R 2 = 74%) a sample data 15 major sectors. The proposed approach produces portfolios that have risk-adjusted statistically significantly better compared other strategies currently used by practitioners. This paper uses investment focuses on and favors diversified unrelated or An empirical investigation employs averages, variances covariances popularities, which are using rates sectors taken database. In line with theory, results show average 74 % ). Hypothesis testing differences Sharpe ratios documents