Travelers’ Prior Knowledge and Search Advertising

Abstract

This paper develops a conceptual framework and hypotheses to provide a better understanding of how traveler search behavior affects the information that firms provide in search advertising. Through an analysis of search advertising in the hotel industry, we find that firms provide significantly more price information in their search advertising to travelers whose search keywords indicate that they have prior product knowledge. This finding suggests that firms engage in tradeoffs between price information and product information in search advertising to better match tourists’ preferences and needs. We also find that such tradeoffs depend on the advertiser type; travel agents are more likely than hoteliers to provide price information to price-conscious travelers. The implications of our results for search engine marketing (SEM) are also discussed.