lecture 5 Flashcards
what are display ads?
a type of paid online advertising, display media consists of text, image, video, audio and motion ads, which display on websites, apps, and social media platforms. These ads can appear in several sizes including banner and reach user across the web
what are search engine ads
they are the ads that pop up over normal links when you look something up on google
overview of the adwords process (getting an online ad)
It all starts with a query
when someone searches for something on google, google looks at the adwords advertisers pool and dettermines whether there will be an auction
If one or more advertisers are biding on keywords that google deems relevant to the search query, an auction is triggered
Advertisers identify keywords they want to bid on, how much they want to spend, and create groupings of these keywords that are paired with ads
Google then enters the keyword from your account it dems most relevant into the auction with the maximum bid youve specified as well as the associated ad
How does google determine which ad is shown where
once you are entered into the auction, google looks at two key factors to determine where your ad ranks your maximum bid and your quality score
Ad rank = CPC bid * quality score
CPC bid: is the maximum bid you specify for your keyword
Quality score: this is a metric to determine how relevant and useful your ad is to the user 8components are CTR relevance and landing page) The higher your quality score the better
How does google determine what you pay (adword process)
You pay the minimum amount you can pay for the position you win if your ad is clicked on.
Your price = the ad rank of the person below you / your quality score + 0.01$
So if advertiser one has a max bid of 2 and a quality score 10, and advertiser 2 has a max bid of 4 and has a quality score of 4. The ad rank of the person below you is 16
Therefore the first advertiser with an ad rank of 20 wins and pays 16/10+0.01
Three options for bids
1) cost per click: how much you pay when a user clicks on your ad
2) cost per mil (CPM): How much you pay per 1000 ad impressions
3) Cost per engagement (CPE): how much you pay when a user performs a specific action on your ad (signs up or a list, watch a video, etc.)
Each of these are converted to a comparable number for the auction
Two alternative sequences of ads have been studied:
1) Public service ads (replace firms ads with ads for NGO or charity
2) An alternative “natural” sequence of ads called ghost ads in literature
PSA (experiment)
Usears are split in these groups:
Control condition: user sees public service announement ads - ads that help raise social awareness
Treatment (aka Test) condition:
User sees the company sad as usual
main idea: by serving these real, alternative ads, we obtain the information on which users would have been exposed to the companys ad if the experiment did not allocate them to see PSA ads
Remark: To show the PSA alternative, you have to win the auction and choose to serve a different ad!
Ghost ads:
identify ads among control group that would have been treatment ads if user was in treatment group
Treatment group: users who see your companys ads (macy in this example)
Control group: user sees whatever ad platform chooses to deliver
Ghost ad implementation
The treatment user sees the real ad won from the real auction
The control user omits the real ad and a simulated auction happens and ghost ad is logged…?
Ghost ad impression
a log entry that flags when an experimental ad would have been served to a user in the control group
Search engines matter: some facts about consumers use search enginges
53% of all organic web traffic comes via search enginge
32 % of all traffic goes to first ranked page
91 % of webpages g et ZERO web traffic from google
40% of purchases influenced by relevant search
Firms respond:
Appx. US$100 billion spent on search ads in the US in 2022
This is almost 40 percent of all digital ad spending in the US
non brand search terms
queries that do not include the name of the brand
Key difference: users might not know product is available at advertisers website
main takeawars brand search terms
ads served via brand search terms are, on average, ineffective at bringing clicks to site
Ads served via non brand search terms are, on average, do not generate sales
Non brand search terms might be effective for:
consumers who do not purchase frequently on site
Consumers who havent purchased in a long time
