Paid Placement: Advertising and Search on the Internet

• 成果类型: Article
• 署名作者: Chen, Yongmin; He, Chuan
• 署名单位: University of Colorado System; University of Colorado Boulder; University of Colorado System; University of Colorado Boulder
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2011.02466.x
• 发表日期: 2011
• 页码: F309-F328
• 关键词: simple-model; prominence

摘要

Paid placement, where advertisers bid payments to a search engine to have their products displayed prominently among the results of a keyword search, has emerged as a predominant form of advertising on the Internet. This article studies a model of product differentiation in which the auction of advertisement positions is embedded in a market game of consumer search. In equilibrium, more relevant sellers for a given keyword bid more and their paid placement by the search engine reveals information about the relevance of their products. This results in efficient sequential search by consumers and increases total output. We also find that the search engine's revenue may have an inverted U-shape with respect to the match probability of the most relevant seller.