An empirical investigation of the performance of online sponsored search markets

ABSTRACT

Online sponsored search advertising has grown to become the dominant form of online advertising with the last few years, with Yahoo! and Google being the leading market providers. While firms bid for better placement in the listing of search results on both these sponsored search markets, Yahoo! and Google have traditionally employed different mechanisms to determine the placement of the advertisements. Using data from these sponsored search markets, this study compares the relative performance of these sponsored search markets and also examines whether intervention by the search intermediary impacts the outcomes in these markets. Our preliminary analysis uncovers interesting differences in the quality-position relationships across the two markets. We find that these differences are further validated by the results of the quantile as well as non-linear regression analyses.

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INDEX TERMS

Primary Classification:
  H. Information Systems
  H.3 INFORMATION STORAGE AND RETRIEVAL
      H.3.3 Information Search and Retrieval

General Terms:
Design, Economics, Human Factors, Performance

Keywords:
online advertising, quality uncertainty, sponsored search