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Consumer Heterogeneity and Paid Search Effectiveness: A Large‐Scale Field Experiment
Author(s) -
Blake Thomas,
Nosko Chris,
Tadelis Steven
Publication year - 2015
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta12423
Subject(s) - purchasing , advertising , revenue , scale (ratio) , econometrics , the internet , channel (broadcasting) , economics , search advertising , online advertising , business , marketing , computer science , geography , telecommunications , accounting , world wide web , cartography
Internet advertising has been the fastest growing advertising channel in recent years, with paid search ads comprising the bulk of this revenue. We present results from a series of large‐scale field experiments done at eBay that were designed to measure the causal effectiveness of paid search ads. Because search clicks and purchase intent are correlated, we show that returns from paid search are a fraction of non‐experimental estimates. As an extreme case, we show that brand keyword ads have no measurable short‐term benefits. For non‐brand keywords, we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.