Should an Ad-Agency Offer Geoconquesting or Protection From It?

44 Pages Posted: 10 Apr 2021 Last revised: 15 Jun 2021

See all articles by Manmohan Aseri

Manmohan Aseri

University of Pittsburgh - Katz Graduate School of Business

Amit Mehra

University of Texas at Dallas

Vijay Mookerjee

University of Texas at Dallas - Naveen Jindal School of Management

Hong Xu

Hong Kong University of Science & Technology (HKUST)

Date Written: March 17, 2021

Abstract

The recent years have witnessed a tremendous increase in Internet advertising, especially location-based advertising on mobile devices. At the same time, search-driven, as well as display advertising on more traditional media such as personal computers, continues to be strong. This study examines the interaction between top-of-funnel advertising (e.g., search or display advertising) and bottom-of-funnel advertising (e.g., using a mobile application on a smart phone). We are particularly interested in the phenomenon of geoconquesting: the bottom-of-funnel advertising efforts of a firm to poach (or lure away) customers that have come to a competing firm's physical store as a result of top-of-funnel advertising efforts by the firm. Geoconquesting efforts by a competing firm should reduce a focal firm's incentive to invest in top-of-funnel efforts. Thus, a key challenge for an agent like Google that provides both top-of-funnel and bottom-of-funnel advertising services, is to balance the inherent conflict between the two in order to maximize the total revenue collected from the two forms of advertising. We develop a game-theoretic model of the above phenomenon. The model is from the perspective of an advertising agent that wishes to maximize the revenue earned from both kinds of advertising services, under the absence or the presence of an outside option that can be used by advertisers to obtain geoconquesting services.

A key result is that sometimes the agent benefits from not offering geoconquesting, but instead promises, after collecting a fee, to protect the advertisers from poaching on each other's search traffic. Interestingly, such a protection service becomes more lucrative for the agent when a cheaper outside option for geoconquesting is available to the advertisers.

Keywords: Geoconquesting, Marketing Funnel, Digital Advertising

Suggested Citation

Aseri, Manmohan and Mehra, Amit and Mookerjee, Vijay and Xu, Hong, Should an Ad-Agency Offer Geoconquesting or Protection From It? (March 17, 2021). HKUST Business School Research Paper No. 2021-018 (also appears in Targeted and Social Network Marketing eJournal), Available at SSRN: https://ssrn.com/abstract=3806867 or http://dx.doi.org/10.2139/ssrn.3806867

Manmohan Aseri (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

HOME PAGE: http://https://www.business.pitt.edu/people/manmohan-aseri

Amit Mehra

University of Texas at Dallas ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States
9728835083 (Phone)

Vijay Mookerjee

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Hong Xu

Hong Kong University of Science & Technology (HKUST) ( email )

999999

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
74
Abstract Views
385
rank
440,200
PlumX Metrics