Study Finds Paid Search Ads Don't Always Pay Off

Businesses spend billions to reach customers through online advertising but just how effective are paid search ads? Using data from eBay, economist Steven Tadelis at UC Berkeley's Haas School of Business compared whether consumers are more likely to click on paid ads than on free, generic search results and found that advertisers may not be getting their money's worth.
"We found that when you turn off the paid advertising, almost all of the traffic that came through the paid search is just substituted by the other free channels," says Tadelis, associate professor in the Haas Business and Public Policy Group.