How to measure the effectiveness of online advertising in online marketplaces

Abstract

The online marketplace, in the form of an "open market" where a very large number of buyers and sellers participate, has occupied a rapidly increasing position in e-commerce, resulting in sellers'''''''' increasing investment in online advertising. Hence, there is a growing need to identify the effectiveness of online advertising in online marketplaces such as eBay.com. However, it is problematic to directly apply the existing online advertising effect models to the click-through data of online marketplaces. Therefore, a model must be developed to estimate the effectiveness of online advertising in the online marketplace in terms of its characteristics. In this paper, we develop an analytical Bayesian approach to modeling click-through data by employing the Poisson-gamma distribution. Our results have implications for online advertising effect measurement, and may help guide advertisers in decision-making. (C) 2010 Elsevier Ltd. All rights reserved.