Keyword Competition and Determinants of Ad Position in Sponsored Search Advertising

Given the significant growth of the Internet in recent years, marketers have been striving for new techniques and strategies to prosper in the online world. Statistically, search engines have been the most dominant channels of Internet marketing in recent years. However, the mechanics of advertising in such a market place has created a challenging environment for marketers to position their ads among their competitors. This study uses a unique cross-sectional dataset of the top 500 Internet retailers in North America and hierarchical multiple regression analysis to empirically investigate the effect of keyword competition on the relationship between ad position and its determinants in the sponsored search market. To this end, the study utilizes the literature in consumer search behavior, keyword auction mechanism design, and search advertising performance as the theoretical foundation. This study is the first of its kind to examine the sponsored search market characteristics in a cross-sectional setting where the level of keyword competition is explicitly captured in terms of the number of Internet retailers competing for similar keywords. Internet retailing provides an appropriate setting for this study given the high-stake battle for market share and intense competition for keywords in the sponsored search market place. The findings of this study indicate that bid values and ad relevancy metrics as well as their interaction affect the position of ads on the search engine result pages (SERPs). These results confirm some of the findings from previous studies that examined sponsored search advertising performance at a keyword level. Furthermore, the study finds that the position of ads for web-only retailers is dependent on bid values and ad relevancy metrics, whereas, multi-channel retailers are more reliant on their bid values. This difference between web-only and multi-channel retailers is also observed in the moderating effect of keyword competition on the relationships between ad position and its key determinants. Specifically, this study finds that keyword competition has significant moderating effects only for multi-channel retailers.

Letter - Frederic Nicholls (Canadian General Electric) to W.B. Rankine, 17 December 1897

A letter from 2nd Vice President and General Manager of Canadian General Electric Company, Frederic Nicholls to W. B. Rankine regarding a bid for contract. The letter mentions that the bid for two alternating generators for the Canadian side of Niagara Falls was won by Westinghouse Eletric and Manufacturing Co. Nicholls also mentions that there will be other opportunites to win contracts as more machines are required. Nicholls also implies that Westinghouse may have bid under cost in an effort to secure the first of many contracts with the Canadian Niagara Power Company.

Letter - C. Sellers to W. B. Rankine, 26 September 1902

A letter from chief engineer C. Sellers to W. B. Rankine discussing the bid of I. P. Morris Co. Sellers discusses conversation with Mr. Hand of I.P. Morris.

Legal document involving John D M’Kay, Thomas Butler, and John Harris, February 5, 1828

Richard Leonard was a member of the 104th Regiment of the British Army. He fought during the War of 1812 at Sackett’s Harbour, Lundy’s Lane and Fort Erie. After the war he settled at Lundy’s Lane and was appointed lieutenant colonel of the 1st Lincoln Militia. He later became the Sheriff of Niagara. He died in 1833 and is buried in the Drummond Hill Cemetery.