Quality Uncertainty and the Performance of Online Sponsored Search Markets: An Empirical Investigation

• 成果类型: Article
• 署名作者: Animesh, Animesh; Ramachandran, Vandana; Viswanathan, Siva
• 署名单位: McGill University; Utah System of Higher Education; University of Utah; University System of Maryland; University of Maryland College Park
• 刊物名称: INFORMATION SYSTEMS RESEARCH
• ISSN/ISSBN: 1047-7047
• DOI: 10.1287/isre.1080.0222
• 发表日期: 2010
• 页码: 190-201
• 关键词: price; signals; reputation; internet; commerce; ebay

摘要

Online sponsored search advertising has emerged as the dominant online advertising format largely because of their pay-for-performance nature, wherein advertising expenditures are closely tied to outcomes. While the pay-for-performance format substantially reduces the wastage incurred by advertisers compared to traditional pay-per-exposure advertising formats, the reduction of such wastage also carries the risk of reducing the signaling properties of advertising. Lacking a separating equilibrium, low-quality firms in these markets may be able to mimic the advertising strategies of high-quality firms. This study examines this issue in the context of online sponsored search markets. Using data gathered from sponsored search auctions for keywords in a market without intervention by the intermediary, we find evidence of adverse selection for products/services characterized by high uncertainty. On the other hand, there is no evidence of adverse selection for similar products in a regulated sponsored search market, suggesting that intervention by the search intermediary can have a significant impact on market outcomes and consumer welfare.