A game-theoretic analysis for creative mid-roll ads on a content platform

Shaofu Du, Zaichen Luo and Li Hu

International Journal of Production Research, 2025, vol. 63, issue 11, 4217-4237

Abstract: The accessibility of pre-roll ads (PAs) has significantly diminished due to the privilege of skipping ads for paid members. Leading video platforms have introduced a new type of streaming ad, the creative mid-roll ad (CMA), which reduces consumer aversion to ads by tightly integrating them with video. Moreover, paid members are also a target group for CMAs, which may conflict with their interests and potentially reduce their viewing volume. We develop a game-theoretical model to examine the platform's advertising pricing and the advertiser's mode selection process. Counterintuitively, the CMA fee rate at equilibrium decreases as video attractiveness and the CMA's ad conversion ability increase because higher video attractiveness and ad conversion ability enhance the advantages of lowering the CMA fee rate. We find that the advertiser will balance conversion efficiency and price gaps between the two ad modes when making decisions. As increased conversion ability prompts advertisers to invest more, a significant gap in conversion efficiency results in higher equilibrium investment in PA mode compared to CMA mode. A low proportion of paid members results in a better consumer surplus in CMA mode than in PA mode, which is because the CMA mode targets paid members with its advertisements.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2024.2439373 (text/html)
Access to full text is restricted to subscribers.

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:taf:tprsxx:v:63:y:2025:i:11:p:4217-4237

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2024.2439373

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().