nep-mkt New Economics Papers
on Marketing
Issue of 2020‒09‒14
three papers chosen by
Marco Novarese
Università del Piemonte Orientale

  1. Network goods, price discrimination, and two-sided platforms By BELLEFLAMME, Paul,; PEITZ, Martin,
  2. Price Advertising, Double Marginalisation and Vertical Restraints By Garrod, Luke; Olczak, Matthew; Wilson, Chris M
  3. How Much Ad Viewability is Enough? The Effect of Display Ad Viewability on Advertising Effectiveness By Christina Uhl; Nadia Abou Nabout; Klaus Miller

  1. By: BELLEFLAMME, Paul, (CORE, Université catholique de Louvain); PEITZ, Martin, (Universität Mannheim)
    Abstract: A monopolist sells a network good to a set of heterogeneous users who all care about total participation. We show that the provider of the network good effectively becomes a two-sided platform if it can condition prices on some user characteristics. This still holds true if the network operator cannot obsoerve consumer characteristics but induces user self-selection when it offers screening contracts. In our setting, all incentive constraints are slack The use of freemium strategies emerges as a special case of versioning. Here, a base version is offered at zero price and a premium version at a positive price. Overall, the paper illustrates the close link between price discrimination in the presence of a network good and pricing by a two-sided platform.
    Keywords: network goods, two-sided markets, platform pricing, group pricing, menu pricing
    JEL: D62 L12 L82 L86
    Date: 2020–07–01
  2. By: Garrod, Luke; Olczak, Matthew; Wilson, Chris M
    Abstract: Abstract The developing literature on consumer information and vertical relations has yet to consider information provision via costly retail price advertising. By exploring this, we show that the double marginalisation problem exists in equilibrium despite an upstream supplier offering a two-part tariff that is common knowledge to consumers. Intuitively, the supplier elicits higher retail prices to strategically reduce retailers' advertising expenditure in order to extract additional rents. We then demonstrate how vertical restraints, such as resale price maintenance, can increase supply-chain profits and consumer welfare by lowering retail prices despite paradoxically discouraging price advertising.
    Keywords: Price Advertising; Consumer Search; Double Marginalisation; Vertical Restraints; Clearinghouse
    JEL: D40 D83 L42
    Date: 2020–08–26
  3. By: Christina Uhl; Nadia Abou Nabout; Klaus Miller
    Abstract: A large share of all online display advertisements (ads) are never seen by a human. For instance, an ad could appear below the page fold, where a user never scrolls. Yet, an ad is essentially ineffective if it is not at least somewhat viewable. Ad viewability - which refers to the pixel percentage-in-view and the exposure duration of an online display ad - has recently garnered great interest among digital advertisers and publishers. However, we know very little about the impact of ad viewability on advertising effectiveness. We work to close this gap by analyzing a large-scale observational data set with more than 350,000 ad impressions similar to the data sets that are typically available to digital advertisers and publishers. This analysis reveals that longer exposure durations (>10 seconds) and 100% visible pixels do not appear to be optimal in generating view-throughs. The highest view-through rates seem to be generated with relatively lower pixel/second-combinations of 50%/1, 50%/5, 75%/1, and 75%/5. However, this analysis does not account for user behavior that may be correlated with or even drive ad viewability and may therefore result in endogeneity issues. Consequently, we manipulated ad viewability in a randomized online experiment for a major European news website, finding the highest ad recognition rates among relatively higher pixel/second-combinations of 75%/10, 100%/5 and 100%/10. Everything below 75\% or 5 seconds performs worse. Yet, we find that it may be sufficient to have either a long exposure duration or high pixel percentage-in-view to reach high advertising effectiveness. Our results provide guidance to advertisers enabling them to establish target viewability rates more appropriately and to publishers who wish to differentiate their viewability products.
    Date: 2020–08

This nep-mkt issue is ©2020 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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