Do Search Ads Really Work?

More than a century ago, the department store magnate John Wanamaker famously complained about his inability to gauge the effectiveness of the money he spent on advertising. Since then, technologies such as radio, television, and the internet have given companies new venues for self-promotion, but the age-old problem persists:  How can we tell whether ad dollars are really boosting sales?

That question is one factor driving firms to shift ad money to digital media. Not only are people spending more time online, but advertisers.....