Databases Reference
In-Depth Information
However, in the overall sponsored-search auction, additional elements come into
play. First, the CTR of the keyphrase-ad-landing page combination affects the ad's
placement. This is referred to as quality score. If an ad has gotten good CTR rates in
the past, then that ad may be ranked ahead of an ad with a higher bid but lower CTR.
Although the allotment mechanisms vary, comparing quality scores lead to an online
auction model where the general principles of the GSP still hold.
The sponsored-search auction model has had some criticism, most notably that the
keyword auction is not theoretically stable, although many of these analyses are based
on some nonrealistic assumptions. Additionally, there have been criticisms that the
search engine, as market maker, has a built-in incentive to maximize profit for itself at
the expense of the bidders in the auction. This is true, although advertisers could just
take their advertising dollars elsewhere, given that the marketplace is open.
The overall effect of economic assignment of value by the advertisers and mar-
ketplace determination by consumers has led to an effective online advertising pro-
cess where the search engine, advertisers, and consumers are served and rewarded.
Let us now review, in an integrated fashion, all the disparate components of spon-
sored search.
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