Considering In-App Advertising Mode, Platform-App Channel Coordination by a Sustainable Cooperative Advertising Mechanism

Haoyu Liu and Shulin Liu
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Haoyu Liu: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Shulin Liu: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China

Sustainability, 2019, vol. 12, issue 1, 1-28

Abstract: Regardless of the platform or Apps the number of users is a prerequisite for monetization. Considering in-App advertising, through the optimal control theory, this paper establishes a dynamic advertising strategy model of one platform and n Apps under the decentralized and integrated systems. For each system, the model is constrained by the states dynamics of the number of the platform’s users and App’s users. Our research has obtained some management insights and findings as follows. Firstly, Apps don’t have to worry about the negative effects of in-App advertising caused by other Apps when making advertising decisions. Interestingly, the platform will use the advertising subsidy policy to limit the delivery density of in-App advertising. Specifically, the higher the negative impact of in-App advertising caused by App i , the lower the advertising subsidies provided to App i . Additionally, when determining the advertising subsidy rate, the platform will also comprehensively consider the profitability of Apps and the costs and benefits of in-App advertising. Secondly, our proposed sustainable cooperative advertising mechanism can simultaneously coordinate the Platform-App channel and implement the optimal integrated objective. Finally, we theoretically prove that under some mild conditions, the mechanism can both improve the profits of the platform and n Apps.

Keywords: platform; App; advertising; mechanism; system coordination; sustainability; optimal control theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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