Analyzing the Relationship Between Organic and Sponsored Search Advertising: Positive, Negative, or Zero Interdependence?

نویسندگان

  • Sha Yang
  • Anindya Ghose
چکیده

The phenomenon of paid search advertising has now become the most predominant form of online advertising in the marketing world. However, we have little understanding of the impact of search engine advertising on consumers‘ responses in the presence of organic listings of the same firms. In this paper, we model and estimate the inter-relationship between organic search listings and paid search advertisements using a unique panel dataset based on aggregate consumer response to several hundred keywords over three months collected from a major nationwide retailer store chain that advertises on Google. In particular, we focus on understanding whether the presence of organic listings on a search engine is associated with a positive, negative or no effect on the click-through rates of paid search advertisements, and vice-versa for a given firm. We first build an integrated model to estimate the relationship between different metrics such as search volume, click-through rates, conversion rates, costper-click and keyword ranks. A Hierarchical Bayesian modeling framework is used and the model is estimated using Markov Chain Monte Carlo (MCMC) methods. Our empirical findings suggest that clickthroughs on organic listings have a positive interdependence with click-throughs on paid listings, and vice-versa. We also find that this positive interdependence is asymmetric such that the impact of organic clicks on increases in utility from paid clicks is 3.5 times stronger than vice-versa. Using counterfactual experiments, we show that on an average this positive interdependence leads to an increase in expected profits for the firm ranging from 4.2 % to 6.15 % when compared to profits in the absence of this interdependence. To further validate our empirical results, we also conduct and present the results from a controlled field experiment. This experiment shows that total click-through rates, conversions rates and revenues in the presence of both paid and organic search listings are significantly higher than those in the absence of paid search advertisements. The results predicted by the econometric model are also corroborated in this field experiment, which suggests a causal interpretation to the positive interdependence between paid and organic search listings. Given the increased spending on search engine based advertising, our analysis provides critical insights to managers in both traditional and Internet firms.

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

Sponsored Search: Do Organic Results help or hurt the Performance and under what conditions?

Sponsored search accounts for 40% of the total online advertising market. These ads appear as ordered lists along with the organic (regular) search results in search engine results pages. There is conflicting evidence regarding the impact of organic search results on the sponsored search especially when there is an overlap in the results. We evaluate the impact of advertiser’s link as well as t...

متن کامل

Modeling Cross-Category Purchases in Sponsored Search Advertising

A unique aspect of sponsored search advertising is that it allows firms to track what products consumers initially search for and what products they eventually buy after visiting their website – something that is typically hard to acquire in physical world settings. Based on a unique dataset that contains information on what keyword advertisements induced consumers to arrive on a firm’s website...

متن کامل

Advertising Keyword Suggestion Using Relevance-Based Language Models from Wikipedia Rich Articles

When emerging technologies such as Search Engine Marketing (SEM) face tasks that require human level intelligence, it is inevitable to use the knowledge repositories to endow the machine with the breadth of knowledge available to humans. Keyword suggestion for search engine advertising is an important problem for sponsored search and SEM that requires a goldmine repository of knowledge. A recen...

متن کامل

Interplay Between Organic Listing and Sponsored Bidding in Search Advertising

This paper aims to explore the effects of organic listing as a competing information source on the advertising competition (i.e., sponsored bidding) and the outcome performances in search advertising. We set up a game-theoretic model in which firms bid for sponsored advertising slots and compete for consumers in the product market. Firms are asymmetrically differentiated in terms of market pref...

متن کامل

Towards Personalized Advertising in Sponsored Search

Web advertising is one of the major sources of income for numerous search engines, news sites and non-commercial publishers. Textual ads, characterized by Sponsored Search (SS) and Content Match (CM), make up a significant portion of Web advertising. In SS, with limited information about ad contents, given a query, the challenge is to place relevant ads alongside organic search results. Organic...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

عنوان ژورنال:
  • Marketing Science

دوره 29  شماره 

صفحات  -

تاریخ انتشار 2010