Sponsored Search and Market Efficiency

22 Pages Posted: 20 Aug 2010 Last revised: 19 Jun 2014

See all articles by Vasant Dhar

Vasant Dhar

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business

Date Written: August 1, 2010

Abstract

Sponsored search is the mechanism whereby where advertisers pay a fee to Internet search engines to be displayed alongside organic (non-sponsored) web search results. Based on prior literature, we draw an analogy between these markets and financial markets. We use the analogy as well as the key differences to present a theoretical framework consisting of a set of research questions about the pricing of keywords and design choices available to firms in sponsored search markets. These questions define an agenda for future research in sponsored search markets. They also have practical implications for advertisers and online marketplaces such as search engines and social media sites that support advertising.

Keywords: Social media, social commerce, sponsored search, financial markets, user-generated content, market efficiency

JEL Classification: C33, C51, D12, L10, M31, M37, L81, G10, G12, G14

Suggested Citation

Dhar, Vasant and Ghose, Anindya, Sponsored Search and Market Efficiency (August 1, 2010). Available at SSRN: https://ssrn.com/abstract=1660646 or http://dx.doi.org/10.2139/ssrn.1660646

Vasant Dhar

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

HOME PAGE: http://www.stern.nyu.edu/~vdhar

New York University (NYU) - Department of Information, Operations, and Management Sciences

44 West Fourth Street
New York, NY 10012
United States

Anindya Ghose (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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