From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising

Francesco Decarolis and Gabriele Rovigatti

American Economic Review, 2021, vol. 111, issue 10, 3299-3327

Abstract: This paper analyzes the impact of intermediary concentration on the allocation of revenue in online platforms. We study sponsored search documenting how advertisers increasingly bid through a handful of specialized intermediaries. This enhances automated bidding and data pooling, but lessens competition whenever the intermediary represents competing advertisers. Using data on nearly 40 million Google keyword auctions, we first apply machine learning algorithms to cluster keywords into thematic groups serving as relevant markets. Using an instrumental variable strategy, we estimate a decline in the platform's revenue of approximately 11 percent due to the average rise in concentration associated with intermediary merger and acquisition activity.

JEL-codes: C45 D44 G34 L13 L81 M37 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20190811 (application/pdf)
https://doi.org/10.3886/E130502V1 (text/html)
https://www.aeaweb.org/doi/10.1257/aer.20190811.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/aer.20190811.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:111:y:2021:i:10:p:3299-3327

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/aer.20190811

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().