Advertising may not always be profitable.
These were the results of a study that looked at the advantages of taking advantage of the” sponsored” product advertising spaces provided by well-known online retailers like eBay and Amazon.com.
For these spots, which mark the products as” sponsored” or, on some platforms, “ad,” sellers pay platforms marketing costs per visit. These spots are then inserted into a set of ads that are incorporated into consumer search query results. Websites and vendors anticipate that the” sponsored” and “ad” signs will be more noticeable aesthetically.
Consumers, but, frequently prefer to visit on “organic” ads that appear high in their product search benefits but are not sponsored, according to Mingyu” Max” Joo, an associate professor of marketing at UCR’s School of Business and study guide publisher. Websites and vendors anticipate that the” sponsored” and “ad” indicators will be clearly visible.
In reality, a sponsored list can be harmful if it takes the place of an organic list from the seller that would have shown up in the top dozen search results. When a solution appears as an organic listing in these circumstances, consumers are more likely to visit and buy it.
The study was based on an analysis of 448,417 sponsored and organic listings for 8,720 different products from an Indian leading e-commerce system that could be accessed via a wireless system software.
It comes down to believe, Joo said.
Customers do n’t believe a seller’s self-promotion they see in sponsored listings, according to Joo. The seller does not consider a product in the second place to be the real number two if it is being subsidized by the seller.
High-ranking natural advertisements, on the other hand, have the feel of a third-party stamp of approval. According to Joo, consumers consider the product’s algorithms that rate seller listings to be a reliable evaluator.
However, in some circumstances, sponsorships are also wise investments. When sellers ‘ listings appear naturally far down in the consumer’s product query results and are n’t frequently visible to consumers, sponsorships can be profitable. This is due to the possibility that funding advertising will increase the seller’s coverage, and the advantages of this potential exposure may make up for the costs associated with ad avoidance and per-click advertising.
The kind of goods also matters. Consumers do not avoid” sponsored” listings when looking for clothing or fashion items because they base their decisions on how the products appear and are less concerned with the” trustworthiness” of a seller who carries the goods. However, the study found that consumers prefer to buy from a reliable source, such as the highly ranked natural list, for goods that will influence their consumer experiences in the future.
The study’s conclusion leaves retailers in a quandary. They perform best when their natural listings show up prominently in client product search results. However, Joo claimed that the information used and prioritized by the software algorithms that generate solution search results is a closely held secret.
Would Sellers Profit from Sponsored Product Listings? is the question’s title. The study is published online in the journal Marketing Science under the title” Data from an Online Marketplace.” Jiaqi Shi, a grad student at UC Irvine, and Vibhanshu Abhishek, an associate teacher, are its co-authors.