Is Fair Advertising Good for Platforms?

43 Pages Posted: 27 Sep 2021

See all articles by Di Yuan

Di Yuan

University of Pittsburgh - Katz Graduate School of Business

Manmohan Aseri

University of Pittsburgh - Katz Graduate School of Business

Tridas Mukhopadhyay

Carnegie Mellon University - David A. Tepper School of Business

Date Written: August 20, 2021

Abstract

There is sufficient empirical evidence that some groups, e.g., females, are less likely to see advertisements related to economic opportunities, such as employment ads or education degree program ads. More importantly, such biases in advertisements may not be due to any deliberate discrimination by advertisers. Instead, they may occur due to the nature of ad-auctions. For example, females are very lucrative customers for retailers like Macy’s and Target; thus, these retailers place a very high bid in ad-auctions for female impressions and, therefore, win most of these impressions. As a result, an economic-opportunity advertiser, such as an employer, ends up showing its ad to the remaining (male) users. In this paper, we analyze some popular methods of ensuring fairness in the outcome of ad-auctions, on advertising platforms like Facebook, Google, etc. Specifically, we try to understand how these methods of fair-advertising affect the incentives and welfare of various stakeholders.

A popular fairness notion in the literature, referred to as equal-exposure in our paper, requires the advertising platforms to artificially increase the bid of an economic-opportunity advertiser for female impressions in ad-auctions (or give away some free female impressions). The increased bid makes economic-opportunity advertisers more competitive against retailers on female impressions and ensures that both males and females are equally exposed to economic-opportunity ads. However, requiring a profit-maximizing platform to artificially increase the bid of an advertiser might lead to a loss of revenue for the platform. Contrary to this conventional wisdom, our results suggest that enforcing equal-exposure fairness in advertising might increase the profit of advertising platforms. This is because equal-exposure fairness intensifies the competition between an economic- opportunity advertiser and a retail advertiser (e.g., Macy’s). This intensified competition leads to a higher ad-spending by both types of advertisers, which increases the profit of the advertising platform. This result highlights that it is in the interest of the advertising platforms to adopt equal-exposure fairness.

Keywords: Fair Advertising, Algorithmic Fairness, Targeted Advertising, Fair Ad-Auctions

Suggested Citation

Yuan, Di and Aseri, Manmohan and Mukhopadhyay, Tridas, Is Fair Advertising Good for Platforms? (August 20, 2021). Available at SSRN: https://ssrn.com/abstract=3913739 or http://dx.doi.org/10.2139/ssrn.3913739

Di Yuan

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

Pittsburgh, PA 15260
United States

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

Tridas Mukhopadhyay

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-2307 (Phone)

HOME PAGE: http://web.gsia.cmu.edu/display_faculty.aspx?id=102

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