Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcast
  • Managing the Future of Work Podcast
  • About Us
  • Book
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Podcasts
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
  • Browse All
    Exclusive Preferential Placement as Search Diversion: Evidence from Flight Search
    29 Apr 2013Working Paper Summaries

    Exclusive Preferential Placement as Search Diversion: Evidence from Flight Search

    by Benjamin G. Edelman and Zhenyu Lai
    Measuring the net effect of search diversion is important for understanding the extent to which search engines and other intermediaries may act to influence consumer behavior. This paper makes two contributions. First, the authors develop a theoretical model to establish conditions when a search engine chooses to divert search to a less relevant service. Results indicate that search engines have a larger incentive to divert search when they are able to alter the consumers' perceptions of the difference between non-paid and paid placements, and when search engines place a large weight on revenue. These results are consistent with instances where some search engines have labeled paid links with confusing euphemisms or not at all, and where some search engines have mixed paid and non-paid links in the same area of the screen. Second, the authors measure the impact of a diversion mechanism where a search engine exclusively awards a non-paid preferred placement slot to its own service. Specifically, they examine Google's preferred placement of Flight Search. Analysis indicates that there was an 85 percent increase in click-through rates for paid advertising and a 65 percent decrease in click-through rates for non-paid algorithmic search traffic to competing online travel agencies. Both changes are statistically significant, providing evidence of Google's ability to influence how consumers choose services after they search. Key concepts include:
    • There are significant cost increases for Internet startups that obtain large quantities of incoming traffic from search engines. These increases in costs could deter entry into thriving online industries.
    • Search diversion particularly harms the sites that provide services most relevant to users' search queries.
    LinkedIn
    Email

    Author Abstract

    We analyze the incentives for a two-sided intermediary to divert consumers to its favored destinations. Using a quasi-experiment to control for search intent, we identify and measure the impact of a search engine's exclusive award of preferential placement to its own service. We find that Google's differential placement of its Flight Search service led to a 65% decrease in click-through rates for non-paid algorithmic links and an 85% increase in click-through rates for paid advertising listings of competing online travel agencies. Moreover, the exclusive integration of search engine services into search results disproportionately impacted traffic to popular destinations.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: April 2013
    • HBS Working Paper Number: 13-087
    • Faculty Unit(s): Negotiation, Organizations & Markets
      Trending
        • 16 May 2023
        • HBS Case

        How KKR Got More by Giving Ownership to the Factory Floor: ‘My Kids Are Going to College!’

        • 23 May 2023
        • Research & Ideas

        Face Value: Do Certain Physical Features Help People Get Ahead?

        • 31 May 2023
        • HBS Case

        From Prison Cell to Nike’s C-Suite: The Journey of Larry Miller

        • 25 Jan 2022
        • Research & Ideas

        More Proof That Money Can Buy Happiness (or a Life with Less Stress)

        • 25 Feb 2019
        • Research & Ideas

        How Gender Stereotypes Kill a Woman’s Self-Confidence

    Find Related Articles
    • Marketing Strategy
    • Internet
    • Publishing
    • Technology

    Sign up for our weekly newsletter

    Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    ǁ
    Campus Map
    Harvard Business School Working Knowledge
    Baker Library | Bloomberg Center
    Soldiers Field
    Boston, MA 02163
    Email: Editor-in-Chief
    →Map & Directions
    →More Contact Information
    • Make a Gift
    • Site Map
    • Jobs
    • Harvard University
    • Trademarks
    • Policies
    • Accessibility
    • Digital Accessibility
    Copyright © President & Fellows of Harvard College