Modeling the Clickstream: Implications for Web-Based Advertising Efforts
Marketing Science
Designing online auctions with past performance information
Decision Support Systems
INFORMS Journal on Computing
A Model of Search Intermediaries and Paid Referrals
Information Systems Research
Ex Ante Information and the Design of Keyword Auctions
Information Systems Research
Optimal Internet Media Selection
Marketing Science
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Keyword-based ads are becoming the dominant form of advertising online as they enable customization and tailoring of messages relevant to potential consumers. Two prominent channels within this sphere are the search channel and the content channel. We empirically examine the interaction between these two channels. Our results indicate significant cannibalization across the two channels as well as significant diminishing returns to impressions within each channel. This suggests that under certain conditions both channels may need to be used to optimize returns to advertising both for advertisers and service providers such as Google. Our game theoretic analysis which builds upon our empirical findings reveals that for intermediate budget values it is optimal to use both channels whereas for very low (very high) budget values it is optimal to use only the content (search) channel. Further as budget increases the advertiser should offer more for ads displayed on the search channel to optimally incentivize the service provider.