Advertiser Prominence Effects in Search Advertising

Przemys?aw Jeziorski () and Sridhar Moorthy ()
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Przemys?aw Jeziorski: Haas School of Business, University of California, Berkeley, Berkeley, California 94720
Sridhar Moorthy: Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada

Management Science, 2018, vol. 64, issue 3, 1365-1383

Abstract: Search advertising is the ordered list of advertisements that appears when a user searches for something in an online search engine. By construction, these ads differ in prominence: ads higher up the list are more prominent than ads lower down the list. However, search ads also differ in prominence in another way: prominence of advertiser. This paper examines how these two types of prominence interact in determining the click-through rate (CTR) of these ads. Using individual-level click-stream data from Microsoft’s Live Search platform and measures of advertiser prominence from Alexa.com , we find that ad position and advertiser prominence are substitutes. Specifically, in searches for camera brands, a retailer not in the top 100 of Alexa rankings has a 30%–50% higher CTR in position 1 than in position 2, whereas a retailer in the top 100 of Alexa rankings has only a 0%–13% higher CTR for the same position improvement. Qualitatively similar results are obtained for several other search strings. These findings demonstrate, first, that advertiser brand matters even for search ads, and, second, the way it matters is the opposite of what is usually assumed in the theoretical literature on search advertising.

Keywords: sponsored search; position effects; advertiser prominence (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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