INFORMS Journal on Computing
Comments on "Models and Managers: The Concept of a Decision Calculus"
Management Science
The Race for Sponsored Links: Bidding Patterns for Search Advertising
Marketing Science
Empirical price modeling for sponsored search
WINE'07 Proceedings of the 3rd international conference on Internet and network economics
A Dynamic Model of Sponsored Search Advertising
Marketing Science
A “Position Paradox” in Sponsored Search Auctions
Marketing Science
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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.