Essays in Online Advertising

The last several years have seen a dramatic increase in the amount of time and money consumers spend online. As a consequence, the Internet has become an important channel that firms can use to reach out and connect to consumers which has lead to the emergence of online advertising.Given the scale and novelty of online advertising, there is a growing need to understand how consumers respond to online ads and how firms should advertise using this medium. In my dissertation, I study different aspects of sponsored search and display ads which constitute the bulk of online advertising. In the first essay, I focus on the issues related to the use of aggregate data in sponsored search. I demonstrate that models commonly used in sponsored search research suffer from aggregation bias and present the implications of this aggregation bias. In the second essay, I focus on the advertiser's problem of bidding optimally in sponsored search auctions. In the third essay, I study the interactions between various forms of online advertising like banner ads, display ads and sponsored search ads and address the problem of attribution.