Whole Page Optimization: How Page Elements Interact with the Position Auction

We study the trade-off between layout elements of the search results page and revenue in the real-time sponsored search auction. Using data from a randomized experiment on a major search engine, we find that having images present among the search results tends to simultaneously raise the ad click-through rate and flatten the ad click curve, reducing the premium for occupying the top slot and thus impacting bidding incentives. Theoretical analysis shows that this type of change creates an ambiguous impact on revenue in equilibrium: a steeper curve with lower total click-through rate is preferable only if the expected revenue distribution is skewed enough towards the top bidder. Empirically, we show that this is a relatively rare phenomenon, and we also find that whole page satisfaction causally raises the click-through rate of the ad block. This means search engines have a short-run incentive to boost search result quality, not just a long-run incentive based on competition between providers.