An Empirical Analysis Of Search Engine Advertising: Sponsored Search And Cross-Selling In Electronic Markets

The phenomenon of sponsored search advertising - where advertisers pay a fee to Internet search engines to be displayed alongside organic (non-sponsored) web search results - is gaining ground as the largest source of revenues for search engines. Using a unique panel dataset of several hundred keywords collected from a large nationwide retailer that advertises on Google, the authors empirically model the relationship between different metrics such as click-through rates, conversion rates, bid prices and keyword ranks. The paper proposes a novel framework and data to better understand what drives these differences.