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The impact of organic links in position auctions with popular versus niche keywords

Author

Listed:
  • Michael Arnold

    (Alfred Lerner College of Business and Economics - University of Delaware [Newark], University of Delaware [Newark])

  • Eric Darmon

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Thierry Pénard

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

We analyze a game‐theoretic model to explore the impact of organic links (links generated by the search engine algorithm) and popular versus niche keywords on bidding strategies in sponsored link position auctions. In contrast to results in earlier literature, we find that with organic links the firm with the highest value per click does not necessarily win the first sponsored position; it may be optimal for a firm to bid an amount greater than the expected value from a click; and firms may choose not to bid even if they would incur no cost for clicks on the sponsored link.

Suggested Citation

  • Michael Arnold & Eric Darmon & Thierry Pénard, 2018. "The impact of organic links in position auctions with popular versus niche keywords," Post-Print halshs-01806499, HAL.
    • Handle: RePEc:hal:journl:halshs-01806499
    DOI: 10.1111/ijet.12156
    as

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    Keywords

    organic links;

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