Business, 05.02.2020 10:58 thomasmurphy200

Scenario you are currently in position 2 of a paid search term, the click-through rate is 1%, and the cost per click is $1.50. you can get into position 1 by paying $2.50 per click. in position 1, you expect a click-through rate of 1.5%. in position 3 you would pay $0.50 cost per click and have a click-through rate of 0.5%. the conversion rate once someone clicks is 10% in all 3 positions. our total profit per order—before search costs—is $30. our goal is to maximize absolute $ profit. questions a) what is the cost per order in position 2? b) what is the cost per order in position 1? c) which of the 3 positions do you want to be in? d) at what click through rate in position 1 are you indifferent between positions 1 and 2? e) what is the marginal cost per order of the orders you lose by moving from position 2 down to position 3?

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Scenario you are currently in position 2 of a paid search term, the click-through rate is 1%, and th...

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