Competitive Advertising on Brand Search: Traffic Stealing and Click Quality

44 Pages Posted: 19 Jul 2018 Last revised: 10 Sep 2020

See all articles by Andrey Simonov

Andrey Simonov

Columbia University - Columbia Business School

Shawndra Hill

Microsoft Corporation - Microsoft Research, New York City

Date Written: September 09, 2020

Abstract

We measure the effectiveness of competitive advertising on brand search using a
large-scale, quasi-experimental ad allocation on Bing. Competitors are able to steal
traffic from the focal brand, and they steal an order of magnitude more clicks if the focal
brand's link is exogenously removed from the top paid position (6-15% instead of 1-2%
of traffic). The traffic stealing is primarily done by a competitor in the top paid link
(6-9% of traffic) who bene ts from the presence of other competitors below. However,
the probability of an immediate conversion on these "stolen" clicks is low, with around
20-47% of consumers returning to Bing in less than 30 seconds after the click, compared
to 7% for consumers clicking on the focal brand's link. More relevant competitors get
more clicks with lower quick-back probability. We discuss the managerial implications
of our estimates and compute the quality-adjusted cost of competitors' "offense" and
focal brands' "defense."

Keywords: sponsored search, competitive advertising, brand advertising, customer confusion, adverse selection, field experiments

JEL Classification: M31, M37, D44

Suggested Citation

Simonov, Andrey and Hill, Shawndra, Competitive Advertising on Brand Search: Traffic Stealing and Click Quality (September 09, 2020). Columbia Business School Research Paper No. 18-59, Available at SSRN: https://ssrn.com/abstract=3204394 or http://dx.doi.org/10.2139/ssrn.3204394

Andrey Simonov (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Shawndra Hill

Microsoft Corporation - Microsoft Research, New York City ( email )

641 Avenue of Americas
New York, NY 10011
United States

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