The order effect of advertisers on consumer search behavior in sponsored search markets

Abstract

This research examines consumer search behavior across multiple ordered advertisers in sponsored search markets. To consider the sequential nature of consumer search, we model search behavior as a set of interdependent ordered decisions: namely, the entry, click, and stop decisions. Using individual-level data obtained from a search engine, we identify the key determinants of consumer search behavior in the sponsored section of search results. Our results reveal that there is significant variation in the effects of advertisers' latent brand equity and website quality on the search decisions. Thereby, search behavior heavily depends on the ordered composition of advertisers in sponsored listing. We highlight the ability of our model to quantify the order effect of advertisers on the number of clicks on sponsored ads, which can assist the search engine and advertisers in predicting the click counts and assessing the value of ad positions.