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Author: Massimo Motta
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 38
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Book Description
We investigate the market effects of brand search advertising, within a model where two firms simultaneously choose the price of their (differentiated) product and the bids for the advertising auction which is triggered by own and rival's brand keywords search; and where there exist sophisticated/attentive consumers (who look for any available information on their screen) and naive/inattentive consumers (who only look at the top link of their screen), both aware of either brand's characteristics and price. Relative to a benchmark where only organic search exists, in any symmetric equilibrium each firm wins its own brand auction, and advertising has detrimental effects on welfare: (i) the sponsored link crowds out the rival's organic link, thus reducing competition and choice, and leading to price increases; (ii) the payment of the rival's bid (may) raise marginal cost, also contributing to raise market prices. Under extreme asymmetry (there is an incumbent and an unknown new entrant), we do find that the market effect of brand bidding might be beneficial, if the search engine does not list the entrant's link in organic search, and the share of the sophisticated consumers in the economy is large enough for an equilibrium in which the entrant wins the advertising auction on the search for the incumbent's brand to exist.
Author: Massimo Motta
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 38
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Book Description
We investigate the market effects of brand search advertising, within a model where two firms simultaneously choose the price of their (differentiated) product and the bids for the advertising auction which is triggered by own and rival's brand keywords search; and where there exist sophisticated/attentive consumers (who look for any available information on their screen) and naive/inattentive consumers (who only look at the top link of their screen), both aware of either brand's characteristics and price. Relative to a benchmark where only organic search exists, in any symmetric equilibrium each firm wins its own brand auction, and advertising has detrimental effects on welfare: (i) the sponsored link crowds out the rival's organic link, thus reducing competition and choice, and leading to price increases; (ii) the payment of the rival's bid (may) raise marginal cost, also contributing to raise market prices. Under extreme asymmetry (there is an incumbent and an unknown new entrant), we do find that the market effect of brand bidding might be beneficial, if the search engine does not list the entrant's link in organic search, and the share of the sophisticated consumers in the economy is large enough for an equilibrium in which the entrant wins the advertising auction on the search for the incumbent's brand to exist.
Author: Song Yao
Publisher: Now Publishers Inc
ISBN: 1601982283
Category : Brand loyalty
Languages : en
Pages : 66
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Book Description
Sponsored Search Auctions reviews current academic research on this nascent topic with a focus on future practical and research opportunities
Author: Yanwu Yang
Publisher: Elsevier
ISBN: 0124115047
Category : Computers
Languages : en
Pages : 213
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Book Description
The Intelligent Systems Series publishes reference works and handbooks in three core sub-topic areas: Intelligent Automation, Intelligent Transportation Systems, and Intelligent Computing. They include theoretical studies, design methods, and real-world implementations and applications. The series' readership is broad, but focuses on engineering, electronics, and computer science. Budget constraints and optimization in sponsored search auctions takes into account consideration of the entire life cycle of campaigns for researchers and developers working on search systems and ROI maximization. The highly experienced authors compiled their knowledge and experience to provide insight, algorithms and development techniques for successful optimized/constrained systems. The book presents a cutting-edge budget optimization approach that embraces three-level budget decisions in the life cycle of search auctions: allocation across markets at the system level, distribution over temporal slots at the campaign level, and real-time adjustment at the keyword level. Delivers a systematic overview and technique for understanding budget constraints and ROI optimization in sponsored search auction systems, including algorithms and developer guides for a range of scenarios Explores effects of constraints on mechanisms, bidding and keyword strategies, and the strategies for budget optimization that developers can employ An informative reference source for both software and systems developers working in the search auctions, marketing and sales strategy optimization, services development for online marketing and advertisement, e-commerce, social and economic networking
Author: Animesh Animesh
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Online sponsored search advertising has emerged as the dominant online advertising format largely due to their "pay-for-performance" nature, wherein advertising expenditures are closely tied to outcomes. While the pay-for-performance format substantially reduces the "wastage" incurred by advertisers compared to traditional "pay-per-exposure" advertising formats, the reduction of such wastage also carries the risk of reducing the signaling properties of advertising. Lacking a separating equilibrium, low quality firms in these markets may be able to mimic the advertising strategies of high quality firms. This study examines this issue in the context of online sponsored search markets. Using data gathered from sponsored search auctions for keywords in an unregulated market we find evidence of adverse selection for products/services characterized by high uncertainty. On the other hand, there is no evidence of adverse selection for similar products in a regulated sponsored search market, suggesting that intervention by the search intermediary can have a significant impact on the market outcomes and consumer welfare.
Author: Pallavi Pal
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
In this paper, I derive a new method to identify the distribution of the advertiser's ad-value in the sponsored search auction, explicitly looking at weighted Generalized Second Price auction (GSPw henceforth). Compared to previous literature, this method incorporates a weaker and more realistic assumption of 'incomplete information' on advertisers' private information. Additionally, I evaluate how much the advertisers shade their bid below their value, defined as bid shading amount. The results show that the bid shading is very small; the 50th percentile of the bid shading upper bound is below by 0.2% of their value. The low amount of bid shading is due to high competition intensity in the online ad market as the number of competing bids in the online ad market is very large. The bid shading calculation can also shed light on how the change of ad auction will impact the ad revenue.
Author: Paul Milgrom
Publisher: Cambridge University Press
ISBN: 1139449168
Category : Business & Economics
Languages : en
Pages : 378
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Book Description
This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.
Author: Kinshuk Jerath
Publisher:
ISBN:
Category :
Languages : en
Pages : 41
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Book Description
As sponsored search becomes increasingly important as an advertising medium for firms, search engines are exploring more advanced bidding and ranking mechanisms to increase their revenue from auctions for sponsored search advertising. For instance, Google, Yahoo! and Bing are experimenting with auction mechanisms in which each advertiser can bid to be displayed exclusively. In such an auction, each advertiser submits two bids: one bid for the standard display format in which multiple advertisers are displayed, and one bid for being shown exclusively. The search engine decides the outcome as non-exclusive or exclusive based on revenue generated -- if the exclusive-placement bid by an advertiser is high enough then only that advertiser is displayed, otherwise multiple advertisers are displayed and ranked based on their multiple-placement bids. We find that allowing advertisers to bid for exclusivity has two countervailing effects for search engine revenue. First, competition is heightened because bidders can express their display preferences more flexibly and compete not only for positions in the non-exclusive outcome but also compete for the outcome to be exclusive or non-exclusive; this is good for search engine revenue. Second, competition between non-exclusive and exclusive outcomes gives bidders the incentive to reduce their bids for their non- preferred outcome; this is bad for search engine revenue. Under different parametric conditions, either force can prevail and search engine revenue may increase or decrease accordingly. We also find counterintuitive results on the bidding strategies of advertisers; for instance, we find that, under certain conditions, advertisers have the incentive to bid above their true valuations.
Author: Kate Ho
Publisher: Elsevier
ISBN: 0323988873
Category : Business & Economics
Languages : en
Pages : 782
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Book Description
Handbook of Industrial Organization Volume 4 highlights new advances in the field, with this new volume presenting interesting chapters. Each chapter is written by an international board of authors. Part of the renowned Handbooks in Economics series Chapters are contributed by some of the leading experts in their fields A source, reference and teaching supplement for industrial organizations or industrial economists
Author: Dirk Bergemann
Publisher: World Scientific
ISBN: 981437458X
Category : Business & Economics
Languages : en
Pages : 471
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Book Description
Foreword by Eric Maskin (Nobel Laureate in Economics, 2007)This volume brings together the collected contributions on the theme of robust mechanism design and robust implementation that Dirk Bergemann and Stephen Morris have been working on for the past decade. The collection is preceded by a comprehensive introductory essay, specifically written for this volume with the aim of providing the readers with an overview of the research agenda pursued in the collected papers.The introduction selectively presents the main results of the papers, and attempts to illustrate many of them in terms of a common and canonical example, namely a single unit auction with interdependent values. It is our hope that the use of this example facilitates the presentation of the results and that it brings the main insights within the context of an important economic mechanism, namely the generalized second price auction.
Author: Jicheng Liu
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Chapter 1: "Does Information Change Bidders' Value Distribution in eBayMotor Auctions?"In eBay Motor auctions, sellers voluntarily disclose information of the car to increasethe selling prices (Lewis(2010)). An increase in the number of potential bidders or achange of potential bidders' value distribution can explain this phenomenon. This paperfirst tests whether the information disclosure influences bidders' value distribution byproposing a likelihood ratio test in an eBay auction model with an application to eBayMotor auctions. The test result shows that the bidders' value distribution is not affectedby different information disclosure levels measured by the number of photos providedby sellers in the application to eBay Motor auctions. By exploiting the bidders' valuedistribution estimates, I also calculate the consumer surplus, the mean of consumersurplus is 48% of the selling price which shows how much the online auction marketcan benefit consumers.Chapter 2: "Consumer Search in the Online Movie DVD Market"In this paper, I study the consumers' online search behavior that has been documentedthoroughly in the industrial organization literature. Using unique features of Comscoreconsumer search behavior data and transaction data, I focus on the online movie DVDretail industry. I find several features of consumer search behavior in this specificmarket. Particularly, consumer makes her purchase decision on both price and otherretailer's specific features or its quality.I estimate search costs in a nonsequential search model describing the web browsing andpurchasing behavior. Consumer knows the price distribution and she can ascertain theexact price of each retailer by searching on the firm website. Following the canonicalsearch model, a consumer has two decision steps in each period. First, each consumermakes a choice set decision on how many retailers' websites to visit. After gaininginformation on the exact price of each retailer in the choice set, consumer maximizes her utility over the retailers in her choice set. The estimation result shows the averagesearch costs are around $2.73 for an individual to search a firm's website before eachtransaction.Chapter 3: "A Structural Model of Search with Learning: Application to theOnline Movie DVD Retail Market"Much of the demand literature uses search costs to explain consumer behavior andfirms' pricing strategy in the online retail industry. However, some dynamic featuresof consumer search behavior are not captured. For example, novel web behavioraldata indicates that the consumers' search sets or "consideration sets" change over time.Such evidence of behavior change of consumers is consistent with a consumer learningmodel. Consumers are usually not certain about the firm's quality, for example theavailable service, before their visit to the firm's website. Therefore, the consumer'ssearch decision is a trade-off between higher expected maximum utility from a largersearch set and higher search cost. The decision depends on consumer's informationabout the quality of the firms.In this paper I develop a dynamic discrete choice model where consumers choose theirsearch sets and then make the purchase decision from the firms in their search sets ineach period. Each consumer's search decision is a dynamic process which depends onher endogenous belief evolution on quality.I estimate the dynamic model using the ComScore consumer level search and purchasebehavior data for the movie DVD retail market. The estimation results suggest thatsearch cost is sizable and there exists consumer heterogeneity in firms' quality belief.Consumers are learning about the firms quality very slowly which plays an importantrole in explaining the frequent search behavior change of consumers.Counterfactual experiments suggest that search costs and consumer learning have ahuge impact on the market shares of firms. The industry leader Amazon would have12% less share absent search cost. In addition, I compare the effects of different pricingstrategies of firms. The market share of Amazon shrinks by 2% if Amazon matchesthe price of ColumbiaHouse which has the second largest market share. The marketshare of the leading firm Amazon increases from 35.16% to 68.07% if a consumer hasone-search learning process.
