Foundations and Trends® in Marketing > Vol 3 > Issue 2

Sponsored Search Auctions: Research Opportunities in Marketing

By Song Yao, Department of Marketing, The Fuqua School of Business, Duke University, USA, | Carl F. Mela, Department of Marketing, The Fuqua School of Business, Duke University, USA,

Suggested Citation
Song Yao and Carl F. Mela (2009), "Sponsored Search Auctions: Research Opportunities in Marketing", Foundations and TrendsĀ® in Marketing: Vol. 3: No. 2, pp 75-126.

Publication Date: 27 Apr 2009
© 2009 S. Yao and C. F. Mela
Marketing Information Systems,  Industrial Organization,  Electronic markets, auctions and exchanges,  E-Commerce and E-Business Models
Key word searchMechanism designAuctionsInternet marketingMarketingIndustrial organizationE-commerce

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In this article:
1 Introduction 
2 An Introduction of Sponsored Search Auctions 
3 Internet Users 
4 Advertisers 
5 Search Engines 
6 Conclusion 


We systematically overview the literature in keyword search and propose several promising research directions. The paper is organized by each agent in the search process; searchers, advertisers and the search engine and reviews the key research issues for each. For each group, we outline the decision process involved in keyword search. For searchers, this involves what to search, where to search, which results to click, and when to exit search. For advertisers, this involves where to bid and which word or words to bid on, and how searchers and auction mechanisms moderate these behaviors. The search engine faces choices on mechanism design, website design and how much information to share with its advertisers and searchers. These choices have implications for customer lifetime value and the nature of competition between advertisers. Overall, we list a number of potential areas of future research arising from the decision processes of these various agents.

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Table of contents:
1. Introduction
2. Introduction to Sponsored Search Auctions
3. Internet Users
4. Advertisers
5. Search Engines
6. Conclusions

Sponsored Search Auctions

The sponsored search auction is a newly developed auction practice where advertisers bid for premium spots on the search results page of an Internet search engine. This new form of advertising can create high levels of brand awareness among Internet users. Further, sponsored search advertising can boost sales for retailers, especially in online channels. Hence sponsored search advertising is a powerful tool for generating online traffic. Sponsored Search Auctions reviews current academic research on this nascent topic with a focus on future practical and research opportunities. Sponsored Search Auctions is organized according to the different agents involved with sponsored search auctions: Internet users, advertisers and search engines. This organization allows us to focus on issues regarding each agent's behavior and strategies separately. Advertisers are shifting in whole or in part from other marketing programs to search engine marketing. In marketing, auctions have stimulated research interests because of their growing popularity along with the thriving of online marketplace. Sponsored Search Auctions provides insight into this new practice and guidance for marketing managers.