lecture 6 (1)

Question 1

How does google determine what you pay?

Answer 1

your price = The ad rank of the person below you / your quality score + 0.01

Question 2

How does google determine what you pay example

Answer 2

Advertiser 1: 10(QS)/16 (ad rank of person blow) + 0,01 = 1.61

Question 3

Three options for bids

Answer 3

1. Cost-per-click (how much you pay when a user clicks on your ad
2. Cost-per-mille(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 for a list, watch a video, etc)

Remark: Search enging maps each of these into a comparable number of the auction

Question 4

Business problem: seeks answers to the following strategic questions

Answer 4

are brand based SEM ads effective at bringing traffic to my site

Are non-brand based SEM ads effective at generating sales

Are the effects heterogenous across consumers

Are the effects heterogenous across companies

Data driven answers

Randomized control tirals

Shutdown search enginge ads

Evaluate the effects using difference in differences

Question 5

Brand terms

Answer 5

any queries that include the name of the brand

Question 6

non brand search terms

Answer 6

queries that do not include the name of the brand

Key differences: users might not know product is available at a advertisers website

Question 7

main takeaways

Answer 7

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

Results are suggestive of search engine ads being informative