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http://hdl.handle.net/10419/49865
  

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dc.contributor.authorJeziorski, Przemysławen_US
dc.contributor.authorSegal, Ilyaen_US
dc.date.accessioned2010-11-01en_US
dc.date.accessioned2011-09-27T15:18:19Z-
dc.date.available2011-09-27T15:18:19Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/49865-
dc.description.abstractWe study users' response to sponsored-search advertising using data from Microsoft's Live AdCenter distributed in the 'Beyond Search' initiative. We estimate a structural model of utility maximizing users, which quantifies 'user experience' based on their 'revealed preferences' and predicts user responses to counterfactual ad placements. In the model, each user chooses clicks sequentially to maximize his expected utility under incomplete information about the relevance of ads. We estimate the substitutability of ads in users' utility function, the fixed effects of different ads and positions, user uncertainty about ads' relevance, and user heterogeneity. We find substantial substitutability of ads, which generates large negative externalities: 40% more clicks would occur in a hypothetical world in which each ad faces no competition. As for counterfactual ad placements, our simulations indicate that CTR-optimal matching increases CTR by 10.1% while user-optimal matching increases user welfare by 13.3%. Moreover, targeting ad placement to specific users could raise user welfare by 59%. Here, we find a significant suboptimality (up to 16% of total welfare) in case the search engine tries to implement a sophisticated matching policy using a misspecified model that does not account for externalities. Finally, user welfare could be raised by 14% if they had full information about the relevance of ads to them.en_US
dc.language.isoengen_US
dc.publisherJohns Hopkins Univ., Dep. of Economics Baltimore, Md.en_US
dc.relation.ispartofseriesWorking papers // the Johns Hopkins University, Department of Economics 569en_US
dc.subject.ddc330en_US
dc.titleWhat makes them click: Empirical analysis of consumer demand for search advertisingen_US
dc.typeWorking Paperen_US
dc.identifier.ppn638180376en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Working Papers, Department of Economics, The Johns Hopkins University

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