 Return on Quality Improvements in Search Engine MarketingNadia Abou Nabout and Bernd Skiera Journal of Interactive Marketing, 2012, vol. 26, issue 3, 141-154 Abstract: In search engine marketing, such as on Google, advertisements' ranking and prices paid per click result from generalized, second-price, sealed bid auctions that weight the submitted bids for each keyword by the quality of an advertisement. Conventional wisdom suggests that advertisers can only benefit from improving their advertisement's quality. With an empirical study, this article shows that quality improvements have complex effects whose returns are actually unclear: 5% of all quality improvements to an advertisement lead to higher prices (measured by price per click) per keyword, 100% to a higher number of clicks, 53% to higher costs for search engine marketing, and 37% to lower profits. Quality improvements lead to higher weighted bids, which only lower prices if they do not improve the ranking of the advertisement. Otherwise, better ranks likely lead to higher prices. A decomposition method can disentangle these effects and explain their effects on search engine marketing costs and profits. Finally, the results indicate that advertisers benefit if they lower their bids after improvements to advertising quality. Keywords: Search engine marketing; Keyword advertising; Online marketing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:joinma:v:26:y:2012:i:3:p:141-154 DOI: 10.1016/j.intmar.2011.11.001 Access Statistics for this article Journal of Interactive Marketing is currently edited by B. T. Ratchford More articles in Journal of Interactive Marketing from Elsevier |
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