Allocating budget across portals in search engine advertising

As increasingly popular of search engine advertising which displays advertisements alongside the search results in response to user queries, advertisers can issue ads campaigns across different search engines simultaneously for better return of investment and overall clicks. Advertisers typically have a limited budget that should not be overspent, therefore advertisers must decide how to allocate budget across portals by selecting which portal to use and how much expenditure to allocate for each portal in order to gain maximal return of investment. In this paper, we present a model that can be used for this purpose by using profile of search engine in terms of search volume, advertising efforts, conversion rate and average revenue per action of portals. By examining the necessary conditions of optimal solution and conducting elastic analysis we propose budget allocation principles should be followed by advertisers for their ultimate goal. Furthermore we also analysis the situation when response function of advertising efforts is S-shape, we show that, advertisers should concentrate on one portal when budget is small.