Abstract

http://ssrn.com/abstract=1707858
 
 

Citations (13)



 


 



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


Dirk Bergemann


Yale University - Cowles Foundation - Department of Economics

Alessandro Bonatti


Massachusetts Institute of Technology (MIT) - Sloan School of Management

September 2010

CEPR Discussion Paper No. DP7988

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.

Number of Pages in PDF File: 43

Keywords: Advertising, Internet Advertising, Media Markets, Sponsored Search, Targeting

JEL Classification: D44, D82, D83

working papers series





Date posted: November 14, 2010  

Suggested Citation

Bergemann, Dirk and Bonatti, Alessandro, Targeting in Advertising Markets: Implications for Offline vs. Online Media (September 2010). CEPR Discussion Paper No. DP7988. Available at SSRN: http://ssrn.com/abstract=1707858

Contact Information

Dirk Bergemann (Contact Author)
Yale University - Cowles Foundation - Department of Economics ( email )
28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-3592 (Phone)
203-432-2128 (Fax)
HOME PAGE: http://www.econ.yale.edu/~dirk/
Alessandro Bonatti
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States
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