Abstract

http://ssrn.com/abstract=1989590
 
 

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Do Organic Results Help or Hurt Sponsored Search Performance?


Ashish Agarwal


University of Texas at Austin - Red McCombs School of Business

Kartik Hosanagar


University of Pennsylvania - Operations & Information Management Department

Michael D. Smith


Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

January 21, 2012


Abstract:     
We study the impact of changes in the position of competing listings in organic search results on the performance of sponsored search advertisements. Using data for several keywords from an online retailer’s ad campaign, we measure the impact of organic competition on both click-through rate and conversion rate of sponsored search ads for these keywords.

We find that changes in the position of competing listings in organic results do not impact the click performance of the advertiser. We also find that competing organic listings in higher positions have a negative impact on conversion performance for generic keywords, but may help conversion performance for more specific keywords.

Our results inform advertisers on how the presence of organic results influence the performance of their sponsored advertisements. Our results also provide insight into consumer behavior in sponsored search settings. Specifically we show that consumers pay different levels of attention to search results depending on their search stage, and that this can result in differential impact of organic results on click and conversion performance of sponsored search advertisements..

Number of Pages in PDF File: 40

Keywords: Sponsored search, Organic search, ad placement, hierarchical Bayesian estimation, online advertising, online auctions, search engine marketing

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Date posted: January 23, 2012 ; Last revised: August 20, 2014

Suggested Citation

Agarwal, Ashish and Hosanagar, Kartik and Smith, Michael D., Do Organic Results Help or Hurt Sponsored Search Performance? (January 21, 2012). Available at SSRN: http://ssrn.com/abstract=1989590 or http://dx.doi.org/10.2139/ssrn.1989590

Contact Information

Ashish Agarwal
University of Texas at Austin - Red McCombs School of Business ( email )
Austin, TX 78712
United States
Kartik Hosanagar
University of Pennsylvania - Operations & Information Management Department ( email )
Philadelphia, PA 19104
United States

Michael D. Smith (Contact Author)
Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )
Pittsburgh, PA 15213-3890
United States
HOME PAGE: http://www.heinz.cmu.edu/~mds
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