BUS 572 Session 4: Ghose and Yang Sponsered Search Research

The required reading this week was a research paper from Ghose and Yang published in 2009 entitled "An Empirical Analysis of Search Engine Advertising: Sponsored Search in Electronic Markets".  In this paper, Ghose and Yang attempt to explain what they call the "phenomenon" of paid advertising (pg. 1605).  Although this research is nearly 5 years old, it remains useful as it provides a clear and concise picture of how companies can benefit from proper use of paid advertising.  For example, Ghose and Yang's findings, which at times go against prior conventional wisdom, provide valuable insight to businesses using this technology.  Two of Ghose and Yang's findings I would like to highlight are: Position profitability and Brand-Specific versus Retailer-Specific keywords.

One of Ghose and Yang's (2009) findings that went against prior conventional wisdom was position profitability, or in other words how an ads position on a web page affects the amount of clicks and therefore amount of conversions.  For example, it was previously thought that the best position for ads was at the top of the page.  It seems as though the higher position of an ad correlates with higher clicks.  Ghose and Yang (2009) pointed out that sometimes, number of clicks is not the most important metric and therefore companies should focus on higher conversion rates.  However, ad positioning becomes more expensive moving up the page and clicks become significantly reduced moving down the page.  Ghose and Yang (2009) that "profits are often higher at the middle positions than at the top or bottom ones" (pg 1605).  It seems as though the middle positions strike a balance between cost and conversion rate.

A second key finding by Ghose and Yang (2009) was how consumers look for brand-specific keywords versus retailer-specific keywords.   In general, Ghose and Yang (2009) found that retailer-specific keywords increased click-through and conversion rates and brand-specific keywords decreased click through and conversion rates (pg. 1606).  This can prove to be vital information as retailers attempt to distance themselves from their competition. 

Questions I have moving forward deal with more of the specifics of running ad words.  Now that my team is registered for GOMC, I am curious to see how quickly the challenge progresses.  I find myself wondering how much attention is needed to keep our campaign on track.  I suppose this information will become apparent as we move forward.

At this point in the class, I feel as though I have a solid foundation to manage an AdWords campaign.  I am comfortable with the terminology used and the interface of AdWords.  I look forward to gaining more knowledge through practice during my teams GOMC experience. 

Ghose , A., & Yang, S. (2009). An empirical analysis of search engine advertising: Sponsered search in electronic markets. (Master's thesis, New York University).