Variety Effects in Mobile Advertising
79 Pages Posted: 6 Aug 2020 Last revised: 9 Oct 2021
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: Suggested Citation