Advertising, Content, and Welfare

41 Pages Posted: 18 Oct 2019

See all articles by David S. Evans

David S. Evans

Global Economics Group; Market Platform Dynamics

Date Written: October 12, 2019

Abstract

The attention market involves competition in which platforms acquire time from consumers, with bundles of content and ads, and sell ads to marketers to deliver messages during that time. This paper shows that the attention market solves a transaction-cost problem that prevents efficient exchange between consumers and advertisers and that content plays a central role in solving that problem. The attention market contributes to consumer welfare by supplying valuable content, which more than compensates for any nuisance value of ads, and by facilitating competition through the provision of ads. This paper shows that American adults will spend more than 500 billion hours on ad-supported content in 2019. The value of content is measured in the trillions of dollars given the opportunity cost of time; recent studies of the consumer valuation of online media are consistent with that order of magnitude.

Keywords: advertising, attention platforms, attention markets, media, two-sided markets, network effects, transaction costs, digital platforms, online advertising advertising and welfare, value of online content

JEL Classification: D02, D12, D13, D21, D22, D23, D62, D83, J22, K11, L11, L86, M37

Suggested Citation

Evans, David S., Advertising, Content, and Welfare (October 12, 2019). Available at SSRN: https://ssrn.com/abstract=3466274 or http://dx.doi.org/10.2139/ssrn.3466274

David S. Evans (Contact Author)

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