Variety Effects in Mobile Advertising

79 Pages Posted: 6 Aug 2020 Last revised: 9 Oct 2021

See all articles by Omid Rafieian

Omid Rafieian

Cornell University - Cornell Tech NYC

Hema Yoganarasimhan

University of Washington

Date Written: October 8, 2021

Abstract

Users are often exposed to a sequence of short-lived marketing interventions (e.g.,
ads) within each usage session in mobile apps. This study examines how an increase in
the variety of ads shown in a session affects a user’s response to the next ad. The authors
leverage the quasi-experimental variation in ad assignment in their data and propose
an empirical framework that accounts for different types of confounding to isolate the
effects of a unit increase in variety. Across a series of models, the authors consistently
show that an increase in ad variety in a session results in a higher response rate to
the next ad: holding all else fixed, a unit increase in the variety of the prior sequence of
ads can increase the click-through rate on the next ad by approximately 13%. The
authors then explore the underlying mechanism and document empirical evidence for
an attention-based account. The paper offers important managerial implications since
it identifies a source of interdependence across ad exposures that are often ignored in
the design of advertising auctions. Further, the attention-based mechanism suggests
that platforms can incorporate real-time attention measures to help advertisers with
targeting dynamics.

Keywords: mobile advertising, variety, diversity, attention, digitization, sequential decision-making

JEL Classification: M31, M37, C93, C22

Suggested Citation

Rafieian, Omid and Yoganarasimhan, Hema, Variety Effects in Mobile Advertising (October 8, 2021). Available at SSRN: https://ssrn.com/abstract=3647373 or http://dx.doi.org/10.2139/ssrn.3647373

Omid Rafieian

Cornell University - Cornell Tech NYC ( email )

111 8th Avenue #302
New York, NY 10011
United States

Hema Yoganarasimhan (Contact Author)

University of Washington ( email )

481 Paccar Hall
Seattle, WA 98195
United States

HOME PAGE: http://faculty.washington.edu/hemay/

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