Efficiency Evaluation in Search Advertising

ABSTRACT In this article, we use data envelopment analysis combined with principal component analysis to evaluate the efficiency of online retailers in search advertising. We examine various efficiency model specifications involving several resource and performance‐related variables in search advertising. Our analysis based on 200 retailers suggests different efficiency patterns for multichannel and Web‐only retailers. The results of our efficiency pattern analysis indicate that the performance metrics, impressions, online sales, click‐through rate , and conversion rate together reveal differences in efficiency mainly for multichannel retailers. On the other hand, ad positions in sponsored and organic links reveal differences in efficiency for Web‐only retailers. In terms of overall efficiency, we find that multichannel retailers occupy relatively most of the top positions. These results contribute to organizational level understanding of search advertising practices in online retailing and offer insights into keyword management, resource utilization, and performance metrics in search advertising campaigns.