From Generic to Branded: A Model of Spillover in Paid Search Advertising

TLDR

Internet paid search advertising involves paying for generic and branded keyword ads, and generic searches may create a spillover effect on subsequent branded searches. The authors aim to model the spillover from generic to branded paid search using a dynamic linear framework. They develop a Bayesian dynamic linear model based on the Nerlove–Arrow framework, estimating how generic ads raise brand awareness and trigger future branded searches. The model shows that generic search activity boosts future branded search activity, while branded search does not influence generic search, indicating an asymmetric spillover.

Abstract

In Internet paid search advertising, marketers pay for search engines to serve text advertisements in response to keyword searches that are generic (e.g., “hotels”) or branded (e.g., “Hilton Hotels”). Although standalone metrics usually show that generic keywords have higher apparent costs to the advertiser than branded keywords, generic search may create a spillover effect on subsequent branded search. Building on the Nerlove–Arrow advertising framework, the authors propose a dynamic linear model to capture the potential spillover from generic to branded paid search. In the model, generic search advertisements serve to expose users to information about the brand's ability to meet their needs, raising awareness that the brand is relevant to the search. In turn, this can induce additional future search activity for keywords that include the brand name. Using a Bayesian estimation approach, the authors apply the model to data from a paid search campaign for a major lodging chain. The results show that generic search activity positively affects future branded search activity through awareness of relevance. However, branded search does not affect generic search, demonstrating that the spillover is asymmetric. The findings have implications for understanding search behavior on the Internet and the management of paid search advertising.