Modeling Advertisers' Willingness to Pay in TV Commercial Slot Auctions

Yang Shi and Ying Zhao

Journal of Interactive Marketing, 2019, vol. 48, issue C, 120-133

Abstract: Auctions are receiving increasing attention from both practitioners and researchers in the TV advertising market. This paper studies advertisers' willingness to pay (WTP) in Hong Kong television commercial slot auctions, defined as overlapped, multiple-winner auctions with discrete, ascending, semi-sealed bids. We specify advertisers' WTP as a parametric function of their valuations of slot-specific attributes and the valuations that depend on the context of the focal auction and on the competition from other auctions of similar commercial slots. We extend the two “no-regret” bidding principles (first proposed by Haile and Tamer 2003) to obtain informative boundary conditions for asymptotical identification. The estimation results suggest that advertisers' WTP increases with the TV rating of the program in which the advertisement is embedded and decreases with the bidder's bidding experience and the number of similar slot options available. The WTP also depends on the number of bidders classified into the same product category, as two directly competing advertisers are not allowed to advertise in the same commercial break. In the current practice, advertisers submit discrete bids using price levels set by the TV station. Based on the recovered bidder's WTP, we investigate how the TV station can set adjacent price levels and examine the resulting revenue implications.

Keywords: Willingness to pay (WTP); Auction; TV; Advertising; Competition (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1094996819300751
Full text for ScienceDirect subscribers only

Related works:
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:eee:joinma:v:48:y:2019:i:c:p:120-133

DOI: 10.1016/j.intmar.2019.05.005

Access Statistics for this article

Journal of Interactive Marketing is currently edited by B. T. Ratchford

More articles in Journal of Interactive Marketing from Elsevier
Bibliographic data for series maintained by Catherine Liu ().