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Systemic Concentration in Sponsored Search Markets: The Role of Time Window in Click-Through-Rate Computation

Systemic Concentration in Sponsored Search Markets: The Role of Time Window in Click-Through-Rate... Systemic Concentration in Sponsored Search Markets: The Role of Time Window in Click-Through-Rate Computation AGAM GUPTA, Indian Institute of Management Tiruchirappalli, India BISWATOSH SAHA and UTTAM K. SARKAR, Indian Institute of Management Calcutta, India Keyword-based search engine advertising markets on the Internet, referred to as Sponsored Search Markets (SSMs), have reduced entry barriers to advertising for niche players. Known empirical research, though scant and emerging, suggests that while these markets provided niche firms with greater access, they do exhibit high levels of concentration--a phenomenon that warrants further study. This research, using agentbased simulation of SSM, investigates the role of "market rules" and "advertiser practices" in generating emergent click share heterogeneity among advertisers in an industry. SSMs often rank ads based on the clickthrough rate (CTR) that gives rise to reinforcing dynamics at an individual keyword level. In the presence of spillovers arising from advertisers' practice of managing keyword bids with a cost cap operating on the keyword portfolio, these reinforcing dynamics can endogenously generate industry-level concentration. Analysis of counterfactual markets with different window sizes used to compute CTR reveals that industrylevel concentration bears an inverted-"U" relationship with window size. Categories and Subject Descriptors: K.6.0 [Management of Computing and http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ACM Transactions on Management Information Systems (TMIS) Association for Computing Machinery

Systemic Concentration in Sponsored Search Markets: The Role of Time Window in Click-Through-Rate Computation

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Publisher
Association for Computing Machinery
Copyright
Copyright © 2016 by ACM Inc.
ISSN
2158-656X
DOI
10.1145/2934695
Publisher site
See Article on Publisher Site

Abstract

Systemic Concentration in Sponsored Search Markets: The Role of Time Window in Click-Through-Rate Computation AGAM GUPTA, Indian Institute of Management Tiruchirappalli, India BISWATOSH SAHA and UTTAM K. SARKAR, Indian Institute of Management Calcutta, India Keyword-based search engine advertising markets on the Internet, referred to as Sponsored Search Markets (SSMs), have reduced entry barriers to advertising for niche players. Known empirical research, though scant and emerging, suggests that while these markets provided niche firms with greater access, they do exhibit high levels of concentration--a phenomenon that warrants further study. This research, using agentbased simulation of SSM, investigates the role of "market rules" and "advertiser practices" in generating emergent click share heterogeneity among advertisers in an industry. SSMs often rank ads based on the clickthrough rate (CTR) that gives rise to reinforcing dynamics at an individual keyword level. In the presence of spillovers arising from advertisers' practice of managing keyword bids with a cost cap operating on the keyword portfolio, these reinforcing dynamics can endogenously generate industry-level concentration. Analysis of counterfactual markets with different window sizes used to compute CTR reveals that industrylevel concentration bears an inverted-"U" relationship with window size. Categories and Subject Descriptors: K.6.0 [Management of Computing and

Journal

ACM Transactions on Management Information Systems (TMIS)Association for Computing Machinery

Published: Aug 22, 2016

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