Determine Optimal Bids in Search Engine Advertising
| Rank | CPC (in $) | CTR (in %) | Number of searches | Number of conversions | Profit per conversion bef. ACQ costs (in $) | CPO (in $) | Profit per conversion after ACQ costs (in $) | Profit before ACQ costs (in $) | ACQ costs (in $) | Profit after ACQ costs (in $) |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 1.50 | 7.00 | 2100 | 42.00 | 100.00 | 75.00 | 25.00 | 4,200.00 | 3,150.00 | 1,050.00 |
| 2 | 1.22 | 5.29 | 1,587.45 | 31.75 | 100.00 | 61.24 | 38.76 | 3,174.90 | 1,944.22 | 1,230.68 |
| 3 | 1.00 | 4.00 | 1,200.00 | 24.00 | 100.00 | 50.00 | 50.00 | 2,400.00 | 1,200.00 | 1,200.00 |
| 4 | 0.82 | 3.02 | 907.11 | 18.14 | 100.00 | 40.82 | 59.18 | 1,814.23 | 740.66 | 1,073.57 |
| 5 | 0.67 | 2.29 | 685.71 | 13.71 | 100.00 | 33.33 | 66.67 | 1,371.43 | 457.14 | 914.29 |
| 6 | 0.54 | 1.73 | 518.35 | 10.37 | 100.00 | 27.22 | 72.78 | 1,036.70 | 282.15 | 754.55 |
| 7 | 0.44 | 1.31 | 391.84 | 7.84 | 100.00 | 22.22 | 77.78 | 783.67 | 174.15 | 609.52 |
| 8 | 0.36 | 0.99 | 296.20 | 5.92 | 100.00 | 18.14 | 81.86 | 592.40 | 107.49 | 484.91 |
| 9 | 0.30 | 0.75 | 223.91 | 4.48 | 100.00 | 14.81 | 85.19 | 447.81 | 66.34 | 381.47 |
| 10 | 0.24 | 0.56 | 169.26 | 3.39 | 100.00 | 12.10 | 87.90 | 338.52 | 40.95 | 297.57 |
Optimal Bid: $ 1.16
If you would like to know more about PROSAD, we recommend you to read the following article
Skiera, Bernd / Abou Nabout, Nadia (2012): "PROSAD: A Bidding Decision Support System for PRofit Optimizing Search Engine ADvertising", Marketing Science, 32(2), 213-220, Finalist in the Gary L. Lilien ISMS-MSI Practice Prize Competition.
If you would like to know more about PROSAD, we recommend you to watch the following video.
Prof. Dr. Bernd Skiera
Bernd Skiera is chaired professor of electronic commerce at Goethe-University in Frankfurt, Germany.
Prof. Dr. Nadia Abou Nabout
Nadia Nabout is Professor of Interactive Marketing & Social Media at Vienna University of Economics and Business (WU Wien), Austria