Journal Selections from MSI
Effects of Buyers and Sellers on Search Ad Revenues on B2B Platforms
A look at the economic returns of attracting new vs. existing buyers and sellers
For platform companies that rely on search advertising as a revenue source, a Journal of Marketing Research article offers a detailed look at how buyers and sellers interact at different stages of a search ad service. Their results suggest ways that platform companies can enhance revenue from search ads.
With data collected from a leading B2B platform, Eric Fang, Xiaoling Li, Minxue Huang, and Robert Palmatier analyze the direct and indirect effects of (new and existing) buyers and sellers at launch and mature stages of a search ad service.
They find that new buyers click on more search advertisements than existing buyers, especially after the firm's buyers and sellers have learned and adapted to the service. New sellers tend to outbid existing sellers in the mature stage, but the opposite is true when the service is newly introduced.
Because existing sellers can more effectively send quality signals in the launch stage, attracting existing, rather than new, sellers has a greater effect on click rate in the launch stage; however, the opposite is true in the mature stage. Attracting new buyers also has a greater effect on click rate and price, especially in the mature stage.
These results suggest that managers can enhance revenue with regard to search advertising by targeting new and existing buyers and sellers at different stages.
Download from the American Marketing Association (free until December 2, 2015)
Direct and Indirect Effects of Buyers and Sellers on Search Advertising Revenues in Business-to-Business Electronic Platforms by Eric (ER) Fang, Xiaoling Li, Minxue Huang, and Robert W. Palmatier, Journal of Marketing Research (June 2015)
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