When Does Brand Bidding Pay Off (Even) If Website Competition Is Low?

摘要

Many companies place advertisements on search engine result pages, a practice referred to as search engine advertising (SEA). If their website also appears among the organic results, it is questionable whether SEA makes sense: Free clicks may be substituted by costly clicks on the advertisement (paid result). We propose a model that determines when paid results complement organic results and when they cannibalize them. The model explains both interaction effects by the characteristics of the triggering keyword and the specificity of the advertisement. We evaluate the model in a field experiment in the context of a quasi-monopolistic company and approx. nine million search queries that contain its brand names (brand bidding). This helps to reduce possible biases from competition and user heterogeneity. Preliminary results suggest that superior net effects can be achieved by placing ads for search queries that indicate a navigational or transactional search intention compared to informational searches.