Incremental Clicks: The Impact of Search Advertising

David X. Chan, Yuan Yuan, Jim Koehler and Deepak Kumar

Google Inc.

INTRODUCTION

In recent years, as advertisers have sought to expand their media reach online, search advertising has become increasingly popular. U.S. online advertising spend, in fact, reached $26 billion in 2010, with search advertising accounting for 46 percent of that market. Total U.S. online spend is projected to reach $42 billion by 2013 (Grabstats, 2011).

Search advertising has several advantages over traditional media advertising. Among them:

  • access to direct metrics of impact, such as the number of clicks achieved;
  • allowing advertisers to pay only when a user clicks on an ad; and
  • since the advertisements are triggered by search terms, they tend to be highly relevant to the user.