Search Engine Advertising: Channel Substitution when Pricing Ads to Context
Name
Tucker_Search Engine.pdf
Size
368.48 KB
Format
Adobe PDF
Checksum (MD5)
1899bf35925233a2af9829f9039a28de
Author(s)
Goldfarb, Avi
Tucker, Catherine Elizabeth
Date Issued
January 2011
Journal
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Citation
Goldfarb, A., and C. Tucker. “Search Engine Advertising: Channel Substitution When Pricing Ads to Context.” Management Science 57.3 (2011) : 458-470. ©2011 INFORMS
Version
Author's final manuscript
Abstract
We explore substitution patterns across advertising platforms. Using data on the advertising prices paid by lawyers for 139 Google search terms in 195 locations, we exploit a natural experiment in “ambulance-chaser” regulations across states. When lawyers cannot contact clients by mail, advertising prices per click for search engine advertisements are 5%–7% higher. Therefore, online advertising substitutes for offline advertising. This substitution toward online advertising is strongest in markets with fewer customers, suggesting that the relationship between the online and offline media is mediated by the marketers' need to target their communications.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1287/mnsc.1100.1287
