Competitive Advertising on Brand Search : Traffic Stealing and Click Quality

We measure the effectiveness of competitive advertising on brand search using alarge-scale, quasi-experimental ad allocation on Bing. Competitors are able to stealtraffic from the focal brand, and they steal an order of magnitude more clicks if the focalbrand's link is exogenously removed from the top paid position (6-15% instead of 1-2%of traffic). The traffic stealing is primarily done by a competitor in the top paid link(6-9% of traffic) who bene ts from the presence of other competitors below. However,the probability of an immediate conversion on these "stolen" clicks is low, with around20-47% of consumers returning to Bing in less than 30 seconds after the click, comparedto 7% for consumers clicking on the focal brand's link. More relevant competitors getmore clicks with lower quick-back probability. We discuss the managerial implicationsof our estimates and compute the quality-adjusted cost of competitors' "offense" andfocal brands' "defense."