| OCR Text |
Show 259 THE UNIVERSITY OF UTAH Ever since its inception, the internet has revolutionized everything that we do, spanning the globe with its many capabilities. It has changed the way we communicate with each other, changed the way in which businesses operate, and has provided a new way for companies to offer customers products and services they originally procured through other means. This relatively new tool has marked the growth of a different kind of business model: online retailing. Online retailing provides sellers unprecedented access to niche markets and cus-tomers that originally were unavailable. In addition, it gives companies the ability to cut out several levels of the distribution chain while reducing expensive inventory and retailing costs. A crucial tool that grants access to these benefits is pay per click (PPC) advertising. PPC is a complex advertising business that charges a small referral fee for every customer the search provider sends to the company's site. As a business spends more money on its PPC campaign, its advertisements become more prominent on online search engines. As a result, they gain additional customers and an increase in sales. In this paper I develop an empirical model that assesses the value of PPC advertising for an online food retailer. Using multiple regression analysis, I find that PPC expenditures, cost per click, and average ad placement are all statistically significant variables in predicting a company's expected revenue. The model developed in this paper can be easily adapted to other businesses. Through such a model, businesses can successfully determine whether their products and services would profit by investing in this revolutionary new business tool. PAY PER CLICK: THE NEW ADVERTISING MODEL Alex Layton (Luis Rayo) Department of Finance University of Utah honors college Alex Layton Luis Rayo |
