Sponsored Search and Market Efficiency
22 Pages Posted: 20 Aug 2010 Last revised: 19 Jun 2014
Date Written: August 1, 2010
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
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