Do You See What I See? Ad Viewability and the Economics of Online Advertising

Abstract

Between 40% and 50% of online ads served by publishers are actually never seen by Internet users, resulting in ineffective branding campaigns and a considerable waste of money for advertisers. In reaction, more and more advertisers use technologies to measure the viewability of advertising campaigns on publisher websites. This paper provides the first comprehensive economic analysis of the impact of the adoption of such technologies on the economics of online advertising. We construct a two-sided market model for advertising where publishers manage their website to attract Internet users and advertisers. We show that the adoption of ad viewability technology affects the number of viewable ads displayed by publishers, the price of ads and publisher profits, and user experience. We finally analyze the total welfare impact of ad viewability and examine how ad-blockers constrain publishers from both sides of the market.