Sponsored search advertising is the largest form of the Internet advertising in terms of advertising expenditure. Although researchers have studied various issues in the sponsored search advertising, they have mainly focused on managing each keyword separately without considering the relationship between different keyword queries. However, this is not consistent with the industry practice, and fails to account for the consumers’ search patterns. Online retailers carry various brands and products from competing manufacturers and their advertising strategy needs to include multiple keywords consistent to their product line. Similarly, consumers sequentially search and click on a number of different keywords at different stages of their decision journey. While it is important to understand advertisers’ bidding strategy and consumers’ search behavior in an integrated manner, the previous research in marketing has less explored the interplay between advertisers bids and consumer searches in a multiple keyword setting. We address these issues and offer practical implications on how advertisers should optimally and simultaneously bid on multiple keywords, incorporating consumers click behavior on multiple keywords. This study empirically examines the relationships between consumers’ clicks and online retailers’ bidding strategy on multiple keywords of competing manufacturer brands of 242 retailers. Our data contain daily information of the most popular keywords in a running shoes category on different search advertising metrics. Based on the consumer decision journey and purchase funnel framework, we classify the keywords into different groups following a hierarchical structure of the generic, brands, and models levels and examine the relationships between different keyword groups. Our main findings show that consumers usually click on multiple keywords of each manufacturer brand in a manner consistent with the consumer decision journey or purchase funnel framework, and that consumers are less likely to click on keywords across competing brands. However, online retailers’ bidding pattern is different from consumers’ click behavior in that they simultaneously bid on multiple keywords of competing manufacturer brands at the different hierarchy levels. In sum, our results provide online retailers useful insights to improve their keyword management practice, based on the relationship we identified on the consumer clicks and advertiser bids.

Search advertising, the paid listings on a search engine website based on consumers’ keyword searches, has become one of the most important advertising formats and have thus received a huge amount of attention from both academics and practitioners. While many researchers have studied search advertising in a single keyword framework, in practice, consumers’ search usually involve multiple keywords related to their purchase, and similarly, firms advertise on a set of related keywords. Thus, understanding a utilization of multiple keywords is important for firms to efficiently allocate their advertising budget to each keyword, based on consumers’ decision of which keywords to search and which advertising to click. Therefore, this study aims to examine consumers’ search behavior in terms of their click decisions and retailers’ bidding strategy over a set of related multiple keywords. We empirically examine the aforementioned issues regarding consumer clicks and advertiser bids in a search advertising campaign. We use in our empirical analysis a unique dataset containing a number of related keywords in a running shoes product category, in which consumers frequently make online purchases, pertaining to two leading brands in the product category, Nike and Adidas. Based on the consumer purchase funnel framework, we have classified the keywords into five keyword groups at three different levels, the category, brand, and model level keywords. Our data contain daily information from 242 online retailers on their search advertising metrics such as payments per clicks, bids, quality scores, ranks, and the number of clicks from September 1, 2012 to November 30, 2012. Our empirical findings show that overall, consumers search for keywords in a manner consistent with purchase funnel, although some inconsistencies exist in the detailed behavior, depending on different keyword groups and brands. Our findings also show that retailers simultaneously bid on multiple keywords at different stages of the consumer purchase funnel, suggesting that retailers regard the different keywords as strategic complements. However, our findings suggest that retailers’ allocation of their bids across multiple keywords are often inconsistent with the consumer search behavior. Those findings provide advertisers with new insights on multiple keyword management to develop and implement a more effective search advertising strategy.