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Search Advertising: Is There a Feedback Effect?
W. Wayne Fu1; Carol Y. Ting2; Steven S. Wildman3
2011-10-09
Conference Name18th Biennial Conference of the International Telecommunications Society
Source Publication18th Biennial Conference of the International Telecommunications Society
Conference DateJune 29, 2010
Conference PlaceTokyo, Japan
Abstract

It has been argued that internet search is a two-sided process where consumer and advertiser demand form a feedback loop, an effect that has contributed to high concentration in newspapers, yellow pages and the magazine industries. This paper employs a simultaneous equations model to test for a feedback relationship between consumer usage of internet search engine advertisements and advertiser demand for paid search placements. Three-stage-least squares estimates with data from Yahoo’s local search advertising service support the existence of substantial positive two-way feedback between the consumer and advertiser sides of a local internet search service. We use estimates for the model’s parameters to show how feedback between the consumer and advertiser sides of a search service increases the financial return to resources invested in efforts to increase the number of consumers using the service and how large this effect might be. We also discuss the mechanism through which positive two-way feedback may contribute to the observed pattern of high concentration in national markets for internet search engines.

KeywordSearch Advertising Two-sided Markets Industrial Organization Indirect Network Effects
DOIhttp://dx.doi.org/10.2139/ssrn.2032329
URLView the original
Language英语
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Document TypeConference paper
CollectionDEPARTMENT OF COMMUNICATION
Affiliation1.Nanyang Technological University
2.University of Macau
3.Quello Center; Michigan State University; University of Colorado at Boulder
Recommended Citation
GB/T 7714
W. Wayne Fu,Carol Y. Ting,Steven S. Wildman. Search Advertising: Is There a Feedback Effect?[C],2011.
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