{"title":"Dynamic cooperative strategies in search engine advertising market: With and without retail competition","authors":"Huiran Li , Qiucheng Li , Baozhu Feng","doi":"10.1016/j.elerap.2025.101502","DOIUrl":null,"url":null,"abstract":"<div><div>In search engine advertising (SEA) market, where competition among retailers is intense and multifaceted, channel coordination between retailers and manufacturers emerges as a critical factor, which significantly influences the effectiveness of advertising strategies. This research attempts to provide managerial guidelines for cooperative advertising in the SEA context by modeling two cooperative advertising decision scenarios. Scenario I defines a simple cooperative channel consisting of one manufacturer and one retailer. In Scenario II, we consider a more general setting where there is an independent retailer who competes with the Manufacturer-Retailer alliance in Scenario I. We propose a novel cooperative advertising optimization model, wherein a manufacturer can advertise product directly through SEA campaigns and indirectly by subsidizing its retailer. To highlight the distinctive features of SEA, our model incorporates dynamic quality scores and focuses on a finite time horizon. In each scenario, we provide a feasible equilibrium solution of optimal policies for all members. Subsequently, we conduct numerical experiments to perform sensitivity analysis for both the quality score and gross margin. Additionally, we explore the impact of the initial market share of the competing retailer in Scenario II. Finally, we investigate how retail competition affects the cooperative alliance’s optimal strategy and channel performance. Our identified properties derived from the equilibrium and numerical analyses offer crucial insights for participants engaged in cooperative advertising within the SEA market.</div></div>","PeriodicalId":50541,"journal":{"name":"Electronic Commerce Research and Applications","volume":"71 ","pages":"Article 101502"},"PeriodicalIF":5.9000,"publicationDate":"2025-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Electronic Commerce Research and Applications","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1567422325000274","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
In search engine advertising (SEA) market, where competition among retailers is intense and multifaceted, channel coordination between retailers and manufacturers emerges as a critical factor, which significantly influences the effectiveness of advertising strategies. This research attempts to provide managerial guidelines for cooperative advertising in the SEA context by modeling two cooperative advertising decision scenarios. Scenario I defines a simple cooperative channel consisting of one manufacturer and one retailer. In Scenario II, we consider a more general setting where there is an independent retailer who competes with the Manufacturer-Retailer alliance in Scenario I. We propose a novel cooperative advertising optimization model, wherein a manufacturer can advertise product directly through SEA campaigns and indirectly by subsidizing its retailer. To highlight the distinctive features of SEA, our model incorporates dynamic quality scores and focuses on a finite time horizon. In each scenario, we provide a feasible equilibrium solution of optimal policies for all members. Subsequently, we conduct numerical experiments to perform sensitivity analysis for both the quality score and gross margin. Additionally, we explore the impact of the initial market share of the competing retailer in Scenario II. Finally, we investigate how retail competition affects the cooperative alliance’s optimal strategy and channel performance. Our identified properties derived from the equilibrium and numerical analyses offer crucial insights for participants engaged in cooperative advertising within the SEA market.
期刊介绍:
Electronic Commerce Research and Applications aims to create and disseminate enduring knowledge for the fast-changing e-commerce environment. A major dilemma in e-commerce research is how to achieve a balance between the currency and the life span of knowledge.
Electronic Commerce Research and Applications will contribute to the establishment of a research community to create the knowledge, technology, theory, and applications for the development of electronic commerce. This is targeted at the intersection of technological potential and business aims.