Citation

Discussion Paper Details

Please find the details for DP7988 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Targeting in Advertising Markets: Implications for Offline vs. Online Media

Author(s): Dirk Bergemann and Alessandro Bonatti

Publication Date: September 2010

Keyword(s): Advertising, Internet Advertising, Media Markets, Sponsored Search and Targeting

Programme Area(s): Industrial Organization

Abstract: We develop a model with many advertisers (products) and many advertising markets (media). Each advertiser sells to a different segment of consumers, and each medium has a different ability to target advertising messages. We characterize the competitive equilibrium in the media markets and evaluate the implications of targeting in advertising markets. An increase in the targeting ability leads to an increase in the total number of purchases (matches), and hence in the social value of advertising. Yet, an improved targeting ability also increases the concentration of firms advertising in each market. Surprisingly, we then find that the equilibrium price of advertisements is first increasing, then decreasing in the targeting ability. We trace out the implications of targeting for competing media. We distinguish offline and online media by their targeting ability: low versus high. As consumers' relative exposure to online media increases, the revenues of offline media decrease, even though the price of advertising might increase.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7988

Bibliographic Reference

Bergemann, D and Bonatti, A. 2010. 'Targeting in Advertising Markets: Implications for Offline vs. Online Media'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7988