Converting browsers into recurring customers: an analysis of the determinants of sponsored search success for monthly subscription services

Abstract

Sponsored search is a multi-billion dollar market. Determining which characteristics of sponsored search campaigns are associated with campaign success has been an active research field, particularly in the consumer retail industry. We develop and examine a theoretical model that integrates and extends established theories of information content, persuasive content, emotion, and style of advertising in traditional media (print, television) to online advertising. We analyze the determinants of sponsored search success across multiple sub-industries in the long term subscription market, with data on four companies who sell long term subscription services with monthly recurring revenue. We use structured equation modeling to test a model that relates bid content features to the average position and number times an ad is displayed (i.e., impressions) in search engine results. In turn, the average position and number of impressions, together with the ad content features, influence the number of times that consumers will click on an ad. The results, based on the magnitude of path coefficients for all companies (i.e., brands), show that average position and total impressions (which are influenced by bid characteristics) have a far stronger effect on clicks than the impact of ad characteristics. The content analysis study undertaken here vividly illustrates that the effects of information content, persuasive content, emotion, and style on advertisement clicks are highly diverse across brands. This suggests the need for future research on brand, product, and consumer-specific factors that influence clicks, and further research on automated tools that provide tailored content optimization guidance to online campaign managers.