Integrating PPC and Flat Fee Pricing Schemes to Optimize the Internal Search Engine Revenue in the Electronic Market

Authors

Pei Li, Department of Management Information Systems, School of Economic Information Engineering, Southwestern University of Finance and Economics, Chengdu, ChinaFollow
Jun Dai, Department of Management Information Systems, School of Economic Information Engineering, Southwestern University of Finance and Economics, Chengdu, ChinaFollow
Zhangxi Lin, College of Business Administration, Texas Tech University, Lubbock, Texas 79409-2101, USAFollow

Document Type

Article

Abstract

Currently, the predominant pricing plan for the search engine (SE) advertising services in a proprietary electronic market is a flat fee (FF) pricing. These services have faced the challenge of customer attrition recently since FF pricing results in the inequality of service surplus among subscribers. A more sustainable and profitable pricing model would be to distinguish advertising resources by providing an additional usage-based pricing for certain user groups to transfer the service surplus among subscribers. We conceive a hybrid model integrating Pay-Per-Click (PPC) pricing into FF pricing. This proposed scheme can offer an incentive-compatible mechanism to attract more subscribers by relieving the inequity of service surplus, and eventually result in the increasing revenue of service providers.

Recommended Citation

Li, Pei; Dai, Jun; and Lin, Zhangxi, "Integrating PPC and Flat Fee Pricing Schemes to Optimize the Internal Search Engine Revenue in the Electronic Market" (2010). ICEB 2010 Proceedings (Shanghai, China). 82.
https://aisel.aisnet.org/iceb2010/82