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Competition and Specificity in Market Design: Evidence from Geotargeted Advertising

Bo Cowgill and Cosmina Dorobantu

No 18-09, Working Papers from NET Institute

Abstract: How should market designers tradeoff liquidity and specificity? We study a natural experiment in the release of a new ad targeting feature by an ad exchange. The platform introduced new targeting into select geographic markets using a regression discontinuity. The experiment affects the specificity advertising assets in the markets (ie, the availability of targeting a city or a zip code). We find evidence that additional specificity reduces the total number of ad impressions delivered by the platform, as advertisers concentrate bidding into fewer, targeted markets. Despite this, we find an overall positive effects on revenue growth in the treated areas. This appears to be driven mainly by increases in clickthrough rates and not through increases in average prices (which actually decreased), and by entry of new advertisers.

Keywords: fixed-to-mobile substitution; incumbency advantage; broadband access (search for similar items in EconPapers)
JEL-codes: L13 L43 L96 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2018-09, Revised 2018-09
New Economics Papers: this item is included in nep-com, nep-cul and nep-ind
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