Vol.:(0123456789) Electronic Commerce Research https://doi.org/10.1007/s10660-018-9313-z 1 3 The impact of ad positioning in search engine advertising: a multifaceted decision problem Carsten D. Schultz 1 © Springer Science+Business Media, LLC, part of Springer Nature 2018 Abstract A general desire in search engine advertising is to rank at the topmost position for maximum attention. Based on a search engine advertising campaign, this study pro- vides empirical evidence that this approach does not necessarily maximize sales. The analysis reveals relationships that result in a non-linear rank proftability. As a consequence, advertisers face the multifaceted decision problem of identifying the optimal rank for their search engine advertisements. The outcome of the advertis- ing activity is determined by three dimensions: the number of prospects (quantity), their acquisition costs (price), and their quality, i.e. is the likelihood to result in sales revenue. The results also difer if evaluated on campaign or keyword level. Conse- quently, research and practice have to consider the efect of a non-monotone rank proftability in search engine advertising, which has been neglected in previous stud- ies. Furthermore, the diferences on campaign and keyword level afect the evalua- tion and corresponding decisions when managing search engine advertising. Keywords Multifaceted decision problem · Rank proftability · Search engine advertising 1 Introduction Search engine advertising has become one of the dominant forms of online adver- tising. According to the Internet Advertising Bureau, search engine advertising accounted for US$40.6 billion in the USA in 2017, an increase of 17.5% compared to 2016 (US$34.6 billion) [29]. After consumers enter a search query, internet search engines, such as Bing or Google, usually display advertisements above, alongside, or below the search results of their proprietary algorithms. For these search engine advertisements, advertisers bid a value that they are willing to pay for each click on their advertisement. These advertisements are then positioned according to an * Carsten D. Schultz carsten.schultz@fernuni-hagen.de 1 University of Hagen, Universitätsstraße 11, 58097 Hagen, Germany