Eventi del

9 2015 12:45 - 14:00
Via Roentgen, 1  4th floor room E4.SR03

Attribution Metrics and Return on Keyword Investment in Paid Search Advertising

P.K. Kannan, University of Maryland

Recently, firms have been experimenting with different attribution metrics such as last-click attribution or first-click attribution to assign conversion credits to search keywords that appear in their consumers’ paths to purchase. These attributed credits impact a firm’s future bidding and budget allocation decisions for keywords and, in turn, determine the overall return-on-investment of search campaigns. In this paper, we analyze the impact of the attribution metric used for imputing conversion credit to search keywords on the overall effectiveness of keyword investments in search campaigns. We model the relationship among the advertiser’s bidding decision for keywords, the search engine’s ranking decision for these keywords, and the consumer’s click-through rate and conversion rate on each keyword, and analyze the impact of the attribution metric used on the overall return-on-investment of paid search advertising.
We estimate our simultaneous equations model using a six-month panel data of several hundred keywords from online jewelry retailer with the data comprising a natural experiment as the retailer changed attribution metric from last-click attribution to first-click attribution half-way through the data window.  This allows us to estimate the impact of the two alternative attribution metrics on the returns realized for keyword investments under different attribution regimes. Our results show that the first-click regime leads to lower overall revenues and this reduction in revenue is stronger for the more specific keywords.  Our policy simulation exercise indicates that the retailer would be able to increase its overall revenue significantly by better attribution of the real contribution of keywords. We also discuss the managerial insights that can be derived from the application of our model.

Keywords: attribution metrics, paid search advertising, ROI, keyword specificity, budget allocation, simultaneous equations system.