Advertising Desirability based on Keyword Search
A recent behavioral study from the Columbia Business School shows evidence that the specific keyword used by a consumer in a search engine can predict the chance that the consumer will click on a directed advertisement. If the consumer searched for a more specific term, they are much more likely to click on a relevant advertisement than if they had searched for a broad, more popular term. The theory behind the findings is that if a person has a more detailed search, then they are more invested in the possibility of purchasing the product, thus making them more likely to be attracted to a relevant advertisement.
The information from this study has potential to give advertisers an advantage on how and where to advertise their products, leading to more calculated selection of advertisement placement. In turn, the more relevant and appealing placing of advertisements may lead to higher profits for the marketers as a result of the increased click activity of those who have more targeted searches. It is also believed that this information will help create a more enjoyable experience for the consumer, as the advertisements will not only be more pertinent to the consumer’s interests, but also could serve a helpful purpose instead of being an annoyance. Individuals who search for broad terms and receive targeted advertisements may see them as irrelevant and bothersome, whereas those who have search for less popular and more specific keywords may be more pleased by distinctive advertisements that pertain to their interests.
In class, we extensively discussed how the prices of slots for search advertisements are determined by the advertiser’s values of a particular slots, which are decided based on the click-through-rate and revenue-per-click of the particular slots. If various advertisers use the information of this Columbia Business School study to determine if a particular slot corresponds to a less popular, more detailed search term, then the value of that slot could be driven significantly higher through competition. If several companies, recognize the value of the detailed search, then the revenue-per-click will be driven up, which in turn would drive up the values and prices for the most desirable slots. Consequently the least desirable slots-the broad, popular searches-would see marked drops in prices as the advertisers recognized their relative lack of usefulness. This is because the click-through-rate would be significantly higher for the specific searches, and therefore the revenue-per-click would be higher for the corresponding slot. The prices would continue to shift until an equilibrium is reached, upon which they would remain stable until another outside factor changed some aspect of the desirability of the advertisement.
http://www.sciencedaily.com/releases/2014/08/140825130152.htm