How should retail advertisers manage multiple keywords in paid search advertising?

Consumers' online searches usually involve multiple keywords about their purchases, which vary depending on the purchase stage. Similarly, retail advertisers use a set of related keywords for competing brands. Thus, understanding how consumers search using keywords for competing brands at different purchase stages is important for retailers seeking to use multiple keywords more effectively. We examine consumers' click behavior and retailers' bids across multiple keywords. We empirically show that, while consumers search in a manner generally consistent with the purchase funnel, their behavior differs between market leader and follower brands. We also find that retailers consider the different keywords to be strategic complements, but this does not hold when consumers are close to making a purchase decision. Interestingly, retailers' bid allocation across keywords may be inconsistent with consumers' click behavior, revealing a potential opportunity to improve the performance of search advertising campaigns.