17. Paid Search Advertising1

Introduction

You’re in the market for a baseball cap, an espresso maker, and a Ferrari F430 (lucky you). You decide you’d like to purchase each of the items in an online auction. You’d like to pay $10 for the hat, $1,000 for the coffee maker, and $150,000 for the Ferrari, so you set aside $151,010 to make sure you land your items.

Without understanding the nuances of the bidding structure, you decide to take an average of your total budget and allocate that as your bid amount on each item—$50,336.67 for the hat, $50,336.67 for the espresso maker, and $50,336.67 for the Ferrari.

Much to your dismay, you later learn you’ve won the auctions for the hat and espresso machine but missed out on the Ferrari. As ridiculous ...

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