Practice Prize Paper ---PROSAD: A Bidding Decision Support System for Profit Optimizing Search Engine Advertising

Bernd Skiera and Nadia Abou Nabout ()
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Nadia Abou Nabout: Faculty of Business and Economics, Department of Marketing, Goethe University Frankfurt, 60629 Frankfurt am Main, Germany

Marketing Science, 2013, vol. 32, issue 2, 213-220

Abstract: This paper reports on a large-scale implementation of marketing science models to solve the bidding problem in search engine advertising. In cooperation with the online marketing agency SoQuero, we developed a fully automated bidding decision support system, PROSAD (PRofit Optimizing Search engine ADvertising; see http://www.prosad.de), and implemented it through the agency's bid management software. The PROSAD system maximizes an advertiser's profit per keyword without the need for human intervention. A closed-form solution for the optimized bid and a newly developed “costs-per-profit” heuristic enable advertisers to submit good bids even when there is significant noise in the data. A field experiment demonstrates that PROSAD can increase the return on investment by 21 percentage points and improve the yearly profit potential for SoQuero and its clients by €2.7 million.

Keywords: decision support system; optimized bidding; search engine advertising; online advertising (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:32:y:2013:i:2:p:213-220

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