Northern Exposure: A Field Experiment Measuring Externalities between Search Advertisements

7 Pages Posted: 17 Dec 2012

See all articles by David Reiley

David Reiley

Pandora Media, Inc.; UC Berkeley School of Information

Sai-Ming Li

Yahoo! - Yahoo! Research Labs

Randall A. Lewis

Amazon

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Abstract

“North” ads, or sponsored listings appearing just above the organic search results, generate the majority of clicks and revenues for search engines. In this paper, we ask whether the competing north ads exert externalities on each other: does increasing the number of rival north ads decrease the number of clicks I receive on my own north ad? We conduct a controlled experiment to investigate this question, and find to our surprise that additional rival ads in the north tend to increase rather than decrease the click through rate (CTR) of the top sponsored listing. We propose several possible explanations for this phenomenon, and point out directions for new theoretical models of sponsored search.

Keywords: Measurement, Economics, Experimentation

JEL Classification: H4, H5

Suggested Citation

Reiley, David H. and Li, Sai-Ming and Lewis, Randall A., Northern Exposure: A Field Experiment Measuring Externalities between Search Advertisements. Available at SSRN: https://ssrn.com/abstract=2190189 or http://dx.doi.org/10.2139/ssrn.2190189

David H. Reiley (Contact Author)

Pandora Media, Inc. ( email )

2101 WEBSTER ST 16TH FLOOR
Oakland, CA 94612
United States

UC Berkeley School of Information ( email )

102 South Hall
Berkeley, CA 94720-4600
United States

Sai-Ming Li

Yahoo! - Yahoo! Research Labs ( email )

Santa Clara, CA 95054
United States

Randall A. Lewis

Amazon ( email )

312-RA-LEWIS (Phone)

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