Keyword portfolio optimization in paid search advertising

Symitsi, Efthymia, Markellos, Raphael N. and Mantrala, Murali K. (2022) Keyword portfolio optimization in paid search advertising. European Journal of Operational Research, 303 (2). pp. 767-778. ISSN 0377-2217

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Abstract

This paper uses investment portfolio theory to determine budget allocation in paid online search advertising. The approach focuses on risk-adjusted performance and favors diversified portfolios of unrelated or negatively correlated keywords. An empirical investigation employs averages, variances and co-variances for keyword popularities, which are estimated using growth rates for 15 major sectors taken from the Google Trends database. In line with portfolio theory, the results show that the average keyword popularity growth is strongly related to the standard deviation of growth for each keyword in the sample (R2 = 74%). Hypothesis testing of differences in Sharpe ratios documents a significantly better performance of the proposed approach compared to that of other strategies currently used by practitioners.

Item Type: Article
Uncontrolled Keywords: budget allocation,markowitz portfolio theory,or in marketing,paid search advertising,search volume index,computer science(all),modelling and simulation,management science and operations research,information systems and management ,/dk/atira/pure/subjectarea/asjc/1700
Faculty \ School: Faculty of Social Sciences > Norwich Business School
Related URLs:
Depositing User: LivePure Connector
Date Deposited: 15 Mar 2022 17:30
Last Modified: 23 Oct 2022 03:39
URI: https://ueaeprints.uea.ac.uk/id/eprint/84064
DOI: 10.1016/j.ejor.2022.03.006

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