Context information can increase revenue in online display advertising auctions: Evidence from a policy change

Journal of Marketing Research

Posted: 8 Aug 2019 Last revised: 10 Dec 2021

See all articles by Sila Ada

Sila Ada

Payla Services GmbH

Nadia Abou Nabout

WU Vienna

Elea McDonnell Feit

Drexel University - Department of Marketing

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

Ada, Sila and Abou Nabout, Nadia and Feit, Elea McDonnell, Context information can increase revenue in online display advertising auctions: Evidence from a policy change (December 10, 2020). Journal of Marketing Research, Available at SSRN: https://ssrn.com/abstract=3432728 or http://dx.doi.org/10.2139/ssrn.3432728

Sila Ada

Payla Services GmbH ( email )

Payla Services GmbH
Vienna, 1020
Austria

Nadia Abou Nabout (Contact Author)

WU Vienna ( email )

Welthandelsplatz 1
Vienna, Vienna 1020
Austria
+43 1 31 336 4900 (Phone)
+43 1 31 336 90 4900 (Fax)

HOME PAGE: http://https://www.wu.ac.at/imsm/jobs/team/abounabout

Elea McDonnell Feit

Drexel University - Department of Marketing ( email )

United States

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