In addition to helping consumers navigate the Web, search engines offer a new kind of e-service known as a sponsored search. Not only a useful promotional tool for Web advertisers, this new technology benefits consumers as well in their hunt for the best deals and lowest prices.

In “Sponsored Search as a Strategic E-Service ”, an article from the most recent issue of the International Journal of E-Services and Mobile Applications (Editor-in-Chief: Dr. Ada Scupola, Roskilde University, Denmark), researcher Dr. Roumen Vragov, Baruch College (USA), investigates the link between the search engines’ revenue generating process and the usefulness of sponsored search to advertisers and consumers.

“The search engine uses an auction to create a list of sponsored links that is displayed next to the usual search results,” writes Vragov. “Consumers search the list to find the best deal.”

Vragov believes another promising way to continue exploring the topic is to conduct experiments with economically-motivated human subjects that probe the effect of different auction rules on profits and surplus under more complex parameter structures. He is currently considering experimental designs for a new study in which customers have combinatorial preferences for products and variable search costs while advertisers have combinatorial preferences for slots and are allowed to submit combinatorial bids. 

(Portions of this article were taken from the International Journal of E-Services and Mobile Applications - Editor-in-Chief: Dr. Ada Scupola.)