Online Advertising

Abstract

This chapter explores what makes online advertising different from traditional advertising channels. We argue that online advertising differs from traditional advertising channels in two important ways: Measurability and Targetability. Measurability is higher because the digital nature of online advertising means that responses to ads can be tracked relatively easily. Targetability is higher because data can be automatically tracked at an individual level, and it is relatively easy to show different people different ads. We discuss recent advances in search advertising, display advertising, and social media advertising and explore the key issues that arise for firms and consumers from measurability and targetability. We then explore possible public policy consequences, with an in-depth discussion of the implications for consumer privacy.

Digital Economics

“…Perhaps because of these forces, many of the largest online companies-in terms of revenues, profits, and users-are advertising-supported. Low-cost tracking means that what distinguishes online advertising from offline advertising is that it is targeted (Goldfarb and Tucker, 2011b;Goldfarb, 2014). This difference is highlighted in models that explore competition between online and offline advertising (Athey and Gans, 2010;Bergemann and Bonatti, 2011;Johnson, 2013).…”

Privacy and Innovation

“…Targetability reflects the collection and use of data to determine which kind of customers would be most likely to be influenced by a particular ad. Measurability reflects the collection and use of data to evaluate whether or not their advertising has actually succeeded (Goldfarb and Tucker, 2011a). Targetability and measurability have helped make advertising-supported internet companies, such as Google and Facebook, among the fastest-growing and most innovative in the US economy.…”

The Effectiveness of Gojek’s Product Placement in Keluarga Cemara Movie towards Purchase Intention

“…(Nagar, 2016). The cost of advertising a product on TV is costly while the quantifiability of the viewing audience is not well measurable due to the possibility of changing the channels when the advertisement appears (Goldfarb & Tucker, 2011).…”