We develop a model of advertising markets in an environment where consumers may switch (or "multi-home") across publishers. Consumer switching generates inefficiency in the process of matching advertisers to consumers, because advertisers may not reach some consumers and may impress others too many times. We find that when advertisers are heterogeneous in their valuations for reaching consumers, the switchinginduced inefficiency leads lower-value advertisers to advertise on a limited set of publishers, reducing the effective demand for advertising and thus depressing prices. As the share of switching consumers expands (e.g., when consumers adopt the Internet for news or increase their use of aggregators), ad prices fall.We demonstrate that increased switching creates an incentive for publishers to invest in quality as well as extend the number of unique users, because larger publishers are favored by advertisers seeking broader "reach" (more unique users) while avoiding inefficient duplication.

Athey, S., Calvano, E., Gans, J.s. (2018). The impact of consumer multi-homing on advertising markets and media competition. MANAGEMENT SCIENCE, 64(4), 1574-1590 [10.1287/mnsc.2016.2675].

The impact of consumer multi-homing on advertising markets and media competition

Calvano, Emilio;
2018-01-01

Abstract

We develop a model of advertising markets in an environment where consumers may switch (or "multi-home") across publishers. Consumer switching generates inefficiency in the process of matching advertisers to consumers, because advertisers may not reach some consumers and may impress others too many times. We find that when advertisers are heterogeneous in their valuations for reaching consumers, the switchinginduced inefficiency leads lower-value advertisers to advertise on a limited set of publishers, reducing the effective demand for advertising and thus depressing prices. As the share of switching consumers expands (e.g., when consumers adopt the Internet for news or increase their use of aggregators), ad prices fall.We demonstrate that increased switching creates an incentive for publishers to invest in quality as well as extend the number of unique users, because larger publishers are favored by advertisers seeking broader "reach" (more unique users) while avoiding inefficient duplication.
2018
Pubblicato
Rilevanza internazionale
Articolo
Esperti anonimi
Settore SECS-P/01 - ECONOMIA POLITICA
English
Advertising
Matching
Media
Multi-homing
Newspapers
Platforms
Single-homing
Switching
Tracking
Two-sided markets
Strategy and Management1409 Tourism
Leisure and Hospitality Management
Management Science and Operations Research
https://pubsonline.informs.org/doi/pdf/10.1287/mnsc.2016.2675
Athey, S., Calvano, E., Gans, J.s. (2018). The impact of consumer multi-homing on advertising markets and media competition. MANAGEMENT SCIENCE, 64(4), 1574-1590 [10.1287/mnsc.2016.2675].
Athey, S; Calvano, E; Gans, Js
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/303884
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