Consumer Click Responses to Paid Ad Set Strategies of Search Platforms

Abstract

Search platforms are contemporary digital services that create value on multi-sided markets through providing services to each side of their platforms—indexing contents for all website operators on the internet, placing pages and tracking performance for paid advertisers or sellers, and searching market offerings to match inquiries for web users. Search platforms are interested in developing strategies at the sponsored ad set level to optimize consumer clicks. Drawing literature supports from hospitality, search engine advertising, and product assortment areas, our study examines the relationships between search platforms’ paid ad strategies (in paid ad set size and set attractiveness) and consumer’s single or multiple clicks on the sponsored ad section. We empirically test the relationships in a multinomial logit modeling approach using a large-scale disaggregated, hotel-search dataset collected from a leading Chinese search engine. Our results suggest a positive but diminishing impact of paid ad set size on a consumer’s set selection and multiple click-through behavior. Our study also spotlights the distinct and often divergent moderating effects of two types of ad attractiveness, preference-based and social-based, on the relationship between paid ad set size and consumer responses. We discuss the theoretical and managerial implications of this research to search platforms and advertisers in hospitality alike.