From Generic to Branded: A Model of Spillover Dynamics in Paid Search Advertising

Oliver J. Rutz, Randolph E. Bucklin
2008 Social Science Research Network  
In Internet paid search advertising, many marketers pay for search engines to serve text ads in response to keyword searches that are generic (e.g., "Hotels") or branded (e.g., "Hilton Hotels"). While stand-alone metrics usually show that generic keywords have higher apparent costs to the advertiser than branded keywords, generic search may create a spillover effect on subsequent branded search. Building on the Nerlove-Arrow advertising framework, the authors propose a dynamic linear model to
more » ... pture the potential spillover from generic to branded paid search. In the model, generic search ads expose users to information about the advertiser's brand, increasing its awareness level. This, in turn, affects future search activity for keywords which include the brand name. Using a Bayesian estimation approach, the authors apply the model to data from a paid search campaign for a major lodging chain. The results show that spillover is asymmetric. Generic search activity positively affects branded search activity via increased awareness but branded search does not affect generic search. Implications for improving metrics for paid search advertising are discussed.
doi:10.2139/ssrn.1024766 fatcat:curg5mcay5gahhy2n2vzc23gpa