Cooperative Search Advertising

Cao, Xinyu; Ke, T. Tony

doi:10.2139/ssrn.2837261

Cited by 10 publications

(12 citation statements)

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“…For example, Hilton and Expedia both sell Hilton rooms in New York, and Expedia takes a commission when it sells a Hilton room; yet both place search ads on keywords like “hotel New York.” Cooperative advertising policies may even exacerbate this competition: Hilton may subsidize the advertising expenditures of Expedia, even though this directly increases Hilton’s keyword advertising costs by making the keyword auctions more competitive. Cao and Ke (2019) and Jerath, Ke, and Long (2018) examine such practices.…”

Section: Organizational Frictions and Inefficienciesmentioning

confidence: 99%

Inefficiencies in Digital Advertising Markets

Gordon¹,

Jerath

Katona

et al. 2020

Journal of Marketing

112

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Digital advertising markets are growing and attracting increased scrutiny. This article explores four market inefficiencies that remain poorly understood: ad effect measurement, frictions between and within advertising channel members, ad blocking, and ad fraud. Although these topics are not unique to digital advertising, each manifests in unique ways in markets for digital ads. The authors identify relevant findings in the academic literature, recent developments in practice, and promising topics for future research.

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Section: Organizational Frictions and Inefficienciesmentioning

confidence: 99%

Inefficiencies in Digital Advertising Markets

Gordon¹,

Jerath

Katona

et al. 2020

Journal of Marketing

112

View full text Add to dashboard Cite

show abstract

“…β i ∈ [0, 1] is the so-called sponsorship rate. This mechanism has been widely used, in both industry practice (Dutta et al 1995;Nagler 2006) and analytical modeling (e.g, Bergen and John 1997;Aust and Buscher 2014;Cao and Ke 2016), for ad spend sharing in vertical relationships. Under the mechanism, the retailer only needs to pay 1 − β 1 − β 2 percentage of her ads spending if she wins the keyword auction.…”

Section: Modelmentioning

confidence: 99%

“…For subsidization, we consider a simple mechanism using which each manufacturer can share a fixed percentage of the retailer's search ad spending. Such a mechanism has been widely adopted in previous literature on cooperative advertising in vertical settings (Dutta et al 1995;Bergen and John 1997;Nagler 2006;Cao and Ke 2016) and is a reasonable approximation of industry practice.…”

Section: Introductionmentioning

confidence: 99%

“…The most related paper in this literature is Cao and Ke (2016), which investigates how a manufacturer cooperates with multiple retailers in search advertising, and finds that it is not always optimal for a manufacturer to cooperate with multiple retailers, and when deciding which one to cooperate with, the manufacturer should choose the one with the highest channel profit per click. Cao and Ke (2016) focuses on a monopolistic manufacturer's optimal channel coordination strategy via cooperative advertising. In contrast, our paper considers multiple manufacturers and a common retailer, and provides a competitive account of the retailer's role in cooperative search advertising.…”

Section: Introductionmentioning

confidence: 99%

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The Logic and Management of 'Digital Co-op' in Search Advertising

Long

Jerath

2018

SSRN Journal

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“…For example, Hilton and Expedia both sell Hilton rooms in New York, and Expedia takes a commission when it sells a Hilton room, yet both place search ads on keywords like "hotel New York." Cooperative advertising policies may even exacerbate this competition; Hilton may subsidize the advertising expenditures of Expedia, even though this directly increases Hilton's keyword advertising costs by making the keyword auctions more competitive Cao and Ke (2019). andJerath et al (2019) examine such practices.…”

mentioning

confidence: 99%

Inefficiencies in Digital Advertising Markets

et al. 2019

View full text Add to dashboard Cite

Digital advertising markets are growing and attracting increased scrutiny. This paper explores four market inefficiencies that remain poorly understood: ad effect measurement, frictions between and within advertising channel members, ad blocking and ad fraud. These topics are not unique to digital advertising, but each manifests in new ways in markets for digital ads. We identify relevant findings in the academic literature, recent developments in practice, and promising topics for future research. * Corresponding authors: zskatona@berkeley.edu , kcwilbur@ucsd.edu 1 Digital advertising markets have offered unprecedented innovations to marketers. Businesses can now advertise to finely targeted sets of individuals with customized commercial messages at specific locations and times in a variety of formats. Compared to traditional advertising, digital ads promise better targeting and relevance, personalized ad content, programmatic sales based on real-time auctions, and measurement of the co-occurrence of individual consumer ad exposures with a variety of online and offline response behaviors. These features have fundamentally altered marketers' spending: digital advertising revenues reached $108B in 2018, up 117% over 2014 (IAB 2019), with expectations to grow 19% and surpass cumulative traditional advertising revenues in 2019 (eMarketer 2019a). Digital advertising markets sell a wide variety of search and display advertising opportunities to marketers. Although digital advertising is 25 years old, market structures are still changing rapidly. For example, a census of marketing technology firms showed an increase from 150 in 2011 to 7,040 in 2019 (Brinker 2019). The IAB Tech Lab recently introduced a series of broad-based initiatives, including a new real-time bidding standard, and Google moved from second-price to first-price auctions for display ads. Publishers have introduced a variety of ad formats, with spending typically following consumer attention and media usage: after initial growth in desktop display and search, recent growth has been more concentrated in social networking, video, audio, and mobile ads.Yet there are indicators that unregulated markets for digital advertising have experienced problems. The E.U. has fined Google more than $9 billion in three antitrust cases and the U.S.Federal Trade Commission fined Facebook $5 billion after it broke a 2012 consent order (Case 19-cv-2184). Prominent politicians have criticized the industry and proposed structural reforms.

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Cooperative Search Advertising

Cited by 10 publications

References 12 publications

Inefficiencies in Digital Advertising Markets

Inefficiencies in Digital Advertising Markets

The Logic and Management of 'Digital Co-op' in Search Advertising

Inefficiencies in Digital Advertising Markets

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