Sponsored Search in Electronic Markets

Sponsored search advertising is advertising in which a company pays a fee to a search engines. They shall then be displayed beside the regular (non-sponsored) search results. A research was conducted on the effectiveness of these sponsored search ads. At the end it was concluded that ads that have more prominent positions at the page with the search results do not necessarily are the most profitable ads. Research concluded that the profits are mostly highest when the ads are placed in the middle of the page instead of at the top or the bottom of the page. Additionally, brand information in the keyword decreases the click through rate and the conversion rate, where as retailer information will increase those. Thus it would be better only to focus the keywords on retailer information.

Besides, landing page quality has a positive relationship with conversation rates. The landing page is the page a consumer gets to when having clicked on an ad. Not only the landing page quality, but also the rank extremely affect the performance of a sponsored search.

At the end, the click activity of a consumer after searching a specific keyword is very low, and more than 95% of the clicks are on organic (thus unsponsored) links.