Efficiency analysis for display ads and contextual search

Authors:
Yung-Ming Li;Jhih-Hua Jhang-Li;Yi-Lin Lee
Affiliations:
National Chiao Tung University: Taiwan, Hsinchu, Taiwan Roc;National Chiao Tung University: Taiwan, Hsinchu, Taiwan Roc;National Chiao Tung University: Taiwan, Hsinchu, Taiwan Roc
Venue:
Proceedings of the ninth international conference on Electronic commerce
Year:
2007

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Abstract

Most News Web sites provide display ads and contextual ads, which are the main ad formats in Internet. Unlike display ads, contextual ad is a performance based advertisement and allows clients to bid for their exposure rate. Not only do Web sites save operation costs but also clients plan their budget flexibly. However, in addition to accuracy of search results, contextual ads like a common resource pool will spend much more time to take the same number of clicks as display ads do. In this paper, we develop a simple economic model to examine the profitability and social efficiency of contextual ads under monopolistic and duopolistic market structures.