The Role of Search Engine Optimization in Search Rankings
Web sites invest significant resources in trying to influence their visibility in online search results. We study the economic incentives of Web sites to invest in this process known as search engine optimization. We focus on methods that improve sites' ranking among the search results without affecting their quality. We find that the process is equivalent to an all-pay auction with noise and headstarts. Our results show that in equilibrium, under certain conditions, some positive level of search engine optimization improves the search engine's ranking and thus the satisfaction of its visitors. In particular, if the quality of sites coincides with their valuation for visitors then search engine optimization serves as a mechanism that improves the ranking by correcting measurement errors. While this benefits consumers and search engines, sites participating in search engine optimization could be worse off unless their valuation for traffic is very high. We also investigate how search engine optimization affects sites' investment in content and find that it can lead to underinvestment as a result of wasteful spending on search engine optimization.
|Date of creation:||12 Jan 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Przemyslaw Jeziorski & Ilya Segal, 2010. "What Makes them Click: Empirical Analysis of Consumer Demand for Search Advertising," Economics Working Paper Archive 569, The Johns Hopkins University,Department of Economics.
- Baye, M. & Kovenock, D. & de Vries, C., 1990.
"The All-Pay Auction with Complete Information,"
1990-51, Tilburg University, Center for Economic Research.
- Kovenock, D. & de Vries, C.G., 1995. "The All-Pay Auction with Complete Information," UFAE and IAE Working Papers 311.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Baye, M.R. & Kovenock, D. & De Vries, C., 1992. "The All-Pay Auction with Complete Information," Papers 8-92-1, Pennsylvania State - Department of Economics.
- Baye, M.R. & Kovenock, D. & De Vries, C.G., 1991. "The All-Pay Auction With Complete Information," Purdue University Economics Working Papers 1007, Purdue University, Department of Economics.
- Baye, M.R. & Kovenock, D. & De Varies, C.G., 1990. "The All-Pay Auction With Complete Information," Papers 9051, Tilburg - Center for Economic Research.
- White, Alexander, 2013. "Search engines: Left side quality versus right side profits," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 690-701.
- Varian, Hal R., 2007. "Position auctions," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1163-1178, December.
- Susan Athey & Glenn Ellison, 2011.
"Position Auctions with Consumer Search,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 126(3), pages 1213-1270.
- Yongmin Chen & Chuan He, 2006.
"Paid Placement: Advertising and Search on the Internet,"
06-02, NET Institute, revised Sep 2006.
- Yongmin Chen & Chuan He, 2011. "Paid Placement: Advertising and Search on the Internet," Economic Journal, Royal Economic Society, vol. 121(556), pages F309-F328, November.
- Dana Sisak, 2009. "Multiple-Prize Contests - The Optimal Allocation Of Prizes," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 82-114, 02.
- Anindya Ghose & Sha Yang, 2007. "An Empirical Analysis of Search Engine Advertising: Sponsored Search and Cross-Selling in Electronic Markets," Working Papers 07-35, NET Institute, revised Sep 2007.
- Arye L. Hillman & John G. Riley, 1987.
"Politically Contestable Rents and Transfers,"
UCLA Economics Working Papers
452, UCLA Department of Economics.
- Anindya Ghose & Sha Yang, 2009. "An Empirical Analysis of Search Engine Advertising: Sponsored Search in Electronic Markets," Management Science, INFORMS, vol. 55(10), pages 1605-1622, October.
- Clark, Derek J. & Riis, Christian, 2000. "Allocation efficiency in a competitive bribery game," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 109-124, May.
- Konrad, Kai A., 2007.
"Strategy in contests: an introduction
[Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).
- Clark, Derek J & Riis, Christian, 1998. "Competition over More Than One Prize," American Economic Review, American Economic Association, vol. 88(1), pages 276-89, March.
- Barut, Yasar & Kovenock, Dan, 1998. "The symmetric multiple prize all-pay auction with complete information," European Journal of Political Economy, Elsevier, vol. 14(4), pages 627-644, November.
- Ron Siegel, 2009. "All-Pay Contests," Econometrica, Econometric Society, vol. 77(1), pages 71-92, 01.
- Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2005.
"Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords,"
NBER Working Papers
11765, National Bureau of Economic Research, Inc.
- Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
- Rene Kirkegaard, 2008. "Favoritism in Contests: Head Starts and Handicaps," Working Papers 0805, Brock University, Department of Economics, revised Nov 2008.
- Zsolt Katona & Miklos Sarvary, 2010. "The Race for Sponsored Links: Bidding Patterns for Search Advertising," Marketing Science, INFORMS, vol. 29(2), pages 199-215, 03-04.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:20129. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.