The Chinese E-Commerce Search Advertising Business: A Case Study of Taobao

Abstract

Given the rapid growth of the e-commerce market in China, there is a growing need to understand the characteristics of the search advertising strategy employed by dominant e-commerce firms in China. This paper presents a case study to understand the search advertising strategy employed by Taobao based on two sample data sets obtained from the online shopping site taobao.com operated under the Chinese e-commerce giant Alibaba. The first data set contains features about the advertisements displayed after the customer’s search using keyword(s). The second data set contains features about the advertisements clicked by customers. These features and the features specific to customers such as their location, time of search, and time of clicking an advertisement in the data sets are studied to reveal insights into the online advertising strategy employed by Taobao in response to customer searches. The results of data analysis show that there is often a relationship among the variables such as the number of advertisements displayed, prices of advertised products, whether a keyword was used in the search, the time elapsed between the start of search and when an advertisement was clicked, the number of keywords used in search, the likelihood of clicking on an advertisement, and price discounts of advertised products. Specific relationships between these variables are formulated as hypothesis and then tested. The insights gained from the test results can be used to develop better business models for sponsored search advertising. Keywords: Online Search, Sponsored Search, Online Advertising, Taobao To cite this document: Joseph Richards and Min Li, "The Chinese E-Commerce Search Advertising Business: A Case Study of Taobao", Contemporary Management Research, Vol.14, No.2, pp. 121-142, 2018. Permanent link to this document: http://dx.doi.org/10.7903/cmr.18285