The moderating effects of keyword competition on the determinants of ad position in sponsored search advertising

This study uses a unique cross-sectional dataset of the top 500 internet retailers in North America and empirically investigates the moderating effects of keyword competition on the relationship between ad position and its determinants in the sponsored search market. The study draws on the literature in keyword auction design, search advertising performance, and consumer search behavior as the theoretical foundation. The study finds a significant variation in the role of keyword competition for web-only versus multi-channel retailers. Specifically, this study finds that keyword competition has a significant moderating effect only for multi-channel retailers. The empirical analysis also indicates that the position of ads for web-only retailers is dependent on bid values and ad relevancy factors, whereas multi-channel retailers are more reliant on their bid values. We discuss the implications of these results in light of the increased popularity of sponsored search advertising in recent years.