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

Francesco Decarolis and Gabriele Rovigatti
Authors registered in the RePEc Author Service: Gabriele Rovigatti 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
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Citations: View citations in EconPapers (12)

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Working Paper: From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising (2019)
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DOI: 10.1257/aer.20190811

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