Placement Disclosure in Ad Auctions: Evidence From a Policy Change

41 Pages Posted: 8 Aug 2019

See all articles by Sila Ada

Sila Ada

Vienna University of Economics and Business - Department of Marketing

Nadia Abou Nabout

WU Vienna

Elea McDonnell Feit

Drexel University - Department of Marketing

Date Written: August 5, 2019

Abstract

Ad exchanges, i.e., platforms where real-time auctions for ad impressions take place, have developed sophisticated technology and data ecosystems to allow advertisers to target users, yet advertisers often do not know which sites their ads appear on. In practice, ad exchanges can easily grant ad placement information to advertisers, allowing advertisers to bid on ads at specific sites. However, ad exchanges are reluctant to disclose placement information due to fears that advertisers will start buying ads only on the most desirable sites leaving inventory on other sites unsold and lowering average revenue. The theoretical literature on information disclosure in auctions suggests that auction revenue is a concave function of information provided and prices will fall when too much or too little information is provided about impressions. This paper explores the empirical effect of ad placement disclosure using a unique data set describing auction outcomes on a major European ad exchange. We find that average revenue per impression rises when ad placement information is provided suggesting that ad context information is important to advertisers. The exception to this are sites which had a low number of buyers prior to the policy change; consistent with theory, these sites with thin markets see prices go down. Our analysis adds evidence that publishers and ad exchanges with thick markets should provide advertisers with site placement information, which can be done at almost no cost.

Keywords: Online display advertising, Real-time bidding, Advertising auctions, Information disclosure, Conflation, Bundling

JEL Classification: M37

Suggested Citation

Ada, Sila and Abou Nabout, Nadia and Feit, Elea McDonnell, Placement Disclosure in Ad Auctions: Evidence From a Policy Change (August 5, 2019). Available at SSRN: https://ssrn.com/abstract=3432728 or http://dx.doi.org/10.2139/ssrn.3432728

Sila Ada

Vienna University of Economics and Business - Department of Marketing ( email )

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://www.wu.ac.at/imsm/team/abounabout/

Elea McDonnell Feit

Drexel University - Department of Marketing ( email )

United States

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