The operational use of sponsored search marketing for online retailers

When using sponsored search marketing, the advertiser pays a search engine to display the advertiser's link among search results. Sponsored search is an increasingly influential advertising tool for many businesses, especially online retailers. The dissertation investigates an online retailer's sponsored search strategy when selling seasonal or perishable products. For such a retailer, inventory is an important consideration, as the value of the product drops significantly after the selling season. With limited inventory, sponsored search is not only a marketing tool, but also an operational lever to better match demand with supply. It provides online retailers a new device to shape the demand - the bid, which indicates how much a retailer is willing to pay the search engine every time the retailer's link is clicked. The bid affects the rank of the retailer's link in the search results page. The rank, in turn, influences the customer traffic to the website and possibly the willingness-to-pay of the customers. Therefore, the retailer can adjust its bid during the selling season to influence both the customer traffic to its website and the willingness to pay of its customers.;The dissertation focuses on balancing supply and demand using sponsored search as well as inventory management and pricing. In particular, Chapters 2 and 3 investigate an online retailer's dual use of sponsored search and dynamic pricing, and Chapter 4 discusses an online retailer's sponsored search strategy in the presence of repeat visitors.