Context Information Can Increase Revenue in Online Display Advertising Auctions: Evidence from a Policy Change

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, highquality sites, should provide ad buyers with context information, which can be done at almost no cost.

Companies inadvertently fund online misinformation despite consumer backlash

“…First, digital advertising platforms that run automated auctions could enable advertisers to more easily access data on whether their advertisements appear on misinformation outlets. This would enable advertisers to make advertising placement decisions consistent with their preferences rather than inadvertently financing misinformation 51 . Second, while it is currently possible for consumers to find out about companies financing misinformation through media reports, digital platforms could improve transparency for consumers about which companies advertise on misinformation outlets.…”

The Early Impact of GDPR Compliance on Display Advertising: The Case of an Ad Publisher

“…Early research on web page context, mostly conducted in the lab, shows that web page context can increase ad performance (e.g., Moore, Stammerjohan, and Coulter 2005). Increasingly, field studies confirm this conclusion (Ada, Abou Nabout, and Feit 2022;Goldfarb andTucker 2011a, 2011b;Lu, Zhao, and Xue 2016;Rafieian and Yoganarasimhan 2021). Rafieian and Yoganarasimhan (2021) estimate a structural model and use counterfactuals to compare the effects of personal data and contextual information in predicting clickthrough rates and find that personal data are more useful than contextual information for ad performance.…”

“…Lu, Zhao, and Xue (2016) find that contextual information and personal data combined are more effective in improving users’ clicks. As for ad revenue, Ada, Abou Nabout, and Feit (2022) find that advertisers value context information in addition to users’ personal data; that is, when an ad exchange provides subdomain information (i.e., ad context) to ad buyers, revenue per impression rises. Similar to the work of Ada, Abou Nabout, and Feit, our study is based on a natural experiment owing to actual policy changes of the GDPR.…”

The Economic Value of User Tracking for Publishers

“…Advertisers can integrate all of these data when deciding on their response to the bid request. The usefulness of these data for improving online advertising also likely influences advertisers' WTP, which then determines the prices and revenue the publisher realizes (Ada, Abou Nabout, and Feit 2022).…”