Advertisers setting up search engine advertising campaigns for the first time need to place bids on keywords, but typically lack experience and data to determine ranks that maximize a keyword's profit (generally referred to as a cold-start problem). This article aims at solving the problem of bidding on keywords in newly set-up search engine advertising campaigns. We suggest that advertisers collect data from the Google Keyword Planner to obtain precise estimates of the percentage increases in prices per click and clickthrough rates, which are needed to calculate optimal bids (exact approach). Together with the profit contribution per conversion and the conversion rate, the advertiser might then set bids that maximize profit. In case advertisers cannot afford to collect the required data, we suggest two proxy approaches and evaluate their performance using the exact approach as a benchmark. The empirical study shows that both proxy approaches perform reasonably well-the easier approach to implement (proxy 2) sometimes performs even better than the more sophisticated one (proxy 1). As a consequence, advertisers might just use this very simple proxy when bidding on keywords in newly set-up SEA campaigns. This research extends the stream of literature on how to determine optimal bids, which so far focuses on campaigns that are already running and where the required data to calculate bids is already available. This research offers a novel approach of determining bids when advertisers lack the aforementioned information.

In my dissertation, I study the strategic interplay among firm’s online communication, firm’s digital strategies and its impact on consumer decision making. I identify important strategies that firms can adopt while targeting consumers on search engine platforms, such as Google and Bing. For technology-firms interested in providing information cues to consumers, online advertising serves as an important tool to nudge consumers decision making. Through the use of diverse methodologies, including empirical, analytical, and behavioral, I attempt to answer important questions in this research space. Moreover, I investigate how firm strategies are affected by factors such as heterogeneity of consumer preferences, product quality, and competition. The research spans across disciplines, and makes contributions to Information Systems, Operations Management and Marketing. In essay 1 I investigate the novel context of “competitive poaching”, a phenomenon where firms can generate traffic from search advertising by bidding on competitors’ keywords. In this research I examine the factors that influence the effectiveness of competitive poaching, specifically the role of different ad copies and the type of competitor (poached brand) from which a brand is “poaching. ”I also examine how the presence of sponsored ads from the poached brand and its physical location affect competitive poaching. In Essay 2, I investigate a similar context but here instead of only competing against each other, firms are simultaneously competing and cooperating with each other while advertising on the search engine. Thus, we have a novel context where a firm and its third-party referral partner (often referred to as “Infomediaries”) compete and cooperate while advertising simultaneously on the search engine. In this context, how equilibrium payment and advertising strategies are affected by factors such as traffic quality, advertising effectiveness, leakage, and the nature of contract between the two firms, remains an open question. Using a game-theoretic model, I show that the novel balance between the competitive and the collaborative nature of the interaction, which itself gets affected by the choice of contract and changes in the environmental factors, alters equilibrium strategies commonly expected in existing literature. In my third essay, I study the novel yet increasingly common phenomenon of “multiscreen viewing”, a phenomenon where consumers are increasingly using additional devices (like smartphones or tablets) while watching TV. This provides an additional advertising channel for marketers, specifically the second screen. However, this is not without its complexities; as marketers must optimally time advertisements on the second screen conditional on multiple factors including consumers’ engagement level on the primary screen, consumers’ engagement level on the second screen, and the psychological involvement with the content on the primary screen. Administering multiple behavioral experiments, I investigate how factors such as users’ engagement with the primary screen (e.g., TV), users’ engagement with a second screen (e.g., Mobile), timing of the advertisement, and message congruence, affect second screen usage and ad recall. Theoretical and managerial contributions of each of these essays are discussed. / Business Administration/Management Information Systems

The expanded internet usage has resulted in an increased activity at web-based search engines. Companies are therefore devoting a large portion of their online marketing budget on Search Engine Marketing (abbreviated SEM) in order to reach potential online consumers searching for products. SEM comprises Search Engine Advertising (SEA) and Search Engine Optimization (SEO) which are two dissimilar marketing tools companies can invest in to reach the desired customer segments. It is therefore of great interest for companies in different product markets to have knowledge of which SEM strategy to utilize. The statement leads to the purpose of the thesis which is to investigate which SEM strategy is the most suitable for companies in different markets, SEA or SEO?. The purpose of the thesis is derived to the research problem: How does the search behavior of consumers differ between the two SEM tools, SEO and SEA?. Initially, in order to answer the research problem, a theoretical framework was conducted consisting of theories from previous research. To collect primary data observations of 60 test subjects was performed in accordance with the Experimental Vignette Methodology. The analysis consists of a comparison between the collected data and the theories included in the frame of reference, to identify similarities and differences. The SPSS analysis of the result revealed numerous findings such as the two-way interactions of the factors degree of involvement and the click rate of SEM, as well as the choice of either a head or a tail keyword and the degree of involvement. The analysis further revealed a three-way interaction which suggests that the degree of involvement, and the use of either a head or tail keyword affects the choice of SEM. Additionally, the result shows that customers using brands as keywords are more likely to click on an organic link rather than on a paid ad. However, when adding the factor age to the analysis the results turn insignificant. As the area of search behavior of customers using search engines is relatively scientifically unexplored, the thesis has contributed with knowledge useful for companies, marketing agencies, among others. However, due to the ongoing expansion of search engine usage, it is of great interest to conduct further research in the area to reveal additional findings.