Context information can increase revenue in online display advertising auctions: Evidence from a policy change
Ada, Sıla, Nadia Abou Nabout, and Elea McDonnell Feit. "Context information can increase revenue in online display advertising auctions: Evidence from a policy change." Journal of Marketing Research 59.5 (2022): 1040-1058.
Posted: 8 Aug 2019 Last revised: 26 Jan 2024
Date Written: December 10, 2020
Abstract
Ad exchanges where real-time auctions for display ad impressions take place historically emphasized user targeting, and advertisers sometimes did not know which sites their ads would appear on, i.e., the ad context. More recently, some ad exchanges have been encouraging publishers to provide context information to ad buyers, allowing them to adjust their bids for ads at specific sites. This paper explores the empirical effect of a change in context information provided by a private European ad exchange. Analyzing this as a quasi-experiment using difference-in-differences, the authors find that average revenue per impression rose when the exchange provided subdomain information to ad buyers. Thus, ad context information is important to ad buyers, and they will act on it. Revenue per impression rises for nearly all sites, which is what is predicted by auction theory when rational buyers with heterogeneous preferences are given more information. The exception to this are sites with thin markets prior to the policy change; consistent with theory, these sites do not show a rise in prices. This paper adds evidence that ad exchanges with reputable publishers, particularly smaller volume, high-quality sites, should provide ad buyers with context information, which can be done at almost no cost.
Keywords: Online display advertising, Real-time bidding, Advertising auctions, Information disclosure
JEL Classification: M37
Suggested Citation: Suggested Citation