IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-17-00140.html
   My bibliography  Save this article

Predicting Advertising Volumes Using Structural Time Series Models: A Case Study

Author

Listed:
  • Ralf Dewenter

    (Helmu-Schmidt-University Hamburg)

  • Ulrich Heimeshoff

    (Heinrich-Heine-University of Duesseldorf)

Abstract

Media platforms typically operate in a two-sided market, where advertising space serves as a major source of revenues. However, advertising volumes are highly volatile over time and characterized by cyclical behavior. Firms' marketing expenditures in general are far from stable. Due to planning of future issues as well as financial planning, platforms have to forecast the demand for advertising space in their future issues. We use structural time series analysis to predict advertising volumes and compare the results with simple autoregressive models.

Suggested Citation

  • Ralf Dewenter & Ulrich Heimeshoff, 2017. "Predicting Advertising Volumes Using Structural Time Series Models: A Case Study," Economics Bulletin, AccessEcon, vol. 37(3), pages 1644-1652.
    • Handle: RePEc:ebl:ecbull:eb-17-00140
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I3-P151.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    2. Ashley, R & Granger, C W J & Schmalensee, R, 1980. "Advertising and Aggregate Consumption: An Analysis of Causality," Econometrica, Econometric Society, vol. 48(5), pages 1149-1167, July.
    3. Harvey, Andrew & Koopman, Siem Jan & Riani, Marco, 1997. "The Modeling and Seasonal Adjustment of Weekly Observations," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 354-368, July.
    4. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    5. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-143, Summer.
    6. Diebold, Francis X & Mariano, Roberto S, 2002. "Comparing Predictive Accuracy," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 134-144, January.
    7. Vijay Mahajan & Eitan Muller, 1986. "Advertising Pulsing Policies for Generating Awareness for New Products," Marketing Science, INFORMS, vol. 5(2), pages 89-106.
    8. Graham Elliott & Allan Timmermann, 2016. "Economic Forecasting," Economics Books, Princeton University Press, edition 1, number 10740.
    9. Harvey, A C & Todd, P H J, 1983. "Forecasting Economic Time Series with Structural and Box-Jenkins Models: A Case Study," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(4), pages 299-307, October.
    10. Durbin, James & Koopman, Siem Jan, 2012. "Time Series Analysis by State Space Methods," OUP Catalogue, Oxford University Press, edition 2, number 9780199641178.
    11. Harvey, A C & Todd, P H J, 1983. "Forecasting Economic Time Series with Structural and Box-Jenkins Models: A Case Study: Response," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(4), pages 313-315, October.
    12. Vijay Mahajan & Eitan Muller, 1986. "Reply—Reflections on Advertising Pulsing Policies for Generating Awareness for New Products," Marketing Science, INFORMS, vol. 5(2), pages 110-111.
    13. Harvey,Andrew C., 1991. "Forecasting, Structural Time Series Models and the Kalman Filter," Cambridge Books, Cambridge University Press, number 9780521405737.
    14. Philip R. Vande Kamp & Harry M. Kaiser, 2000. "Optimal Temporal Policies in Fluid Milk Advertising," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 274-286.
    15. Alison Hubbard Ashton & Robert H. Ashton, 1985. "Aggregating Subjective Forecasts: Some Empirical Results," Management Science, INFORMS, vol. 31(12), pages 1499-1508, December.
    16. Hani I. Mesak, 1992. "An Aggregate Advertising Pulsing Model with Wearout Effects," Marketing Science, INFORMS, vol. 11(3), pages 310-326.
    17. Raufhon Salahodjaev, 2016. "Effect of TV shows on outbound tourism: empirical evidence from Ukraine," Economics Bulletin, AccessEcon, vol. 36(2), pages 752-759.
    18. N/A, 2016. "The UK Economy: Forecast Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 238(1), pages 3-3, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yongyi Zhou & Yulin Zhang & Mark Goh, 2021. "Choice of pricing and advertising schemes for a two‐sided platform," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1865-1885, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dewenter, Ralf & Heimeshoff, Ulrich, 2016. "Predicting advertising volumes: A structural time series approach," DICE Discussion Papers 228, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Marczak, Martyna & Proietti, Tommaso, 2016. "Outlier detection in structural time series models: The indicator saturation approach," International Journal of Forecasting, Elsevier, vol. 32(1), pages 180-202.
    3. Lam, W., 2015. "Switching Costs in Two-sided Markets," LIDAM Discussion Papers CORE 2015024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Renato Gomes & Alessandro Pavan, 2013. "Cross-Subsidization and Matching Design," Discussion Papers 1559, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Prasad A. Naik & Murali K. Mantrala & Alan G. Sawyer, 1998. "Planning Media Schedules in the Presence of Dynamic Advertising Quality," Marketing Science, INFORMS, vol. 17(3), pages 214-235.
    6. Bach Quang Ho & Yuki Inoue, 2020. "Driving Network Externalities in Education for Sustainable Development," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    7. Hai Long Duong & Junhong Chu & Dai Yao, 2023. "Taxi Drivers’ Response to Cancellations and No-Shows: New Evidence for Reference-Dependent Preferences," Management Science, INFORMS, vol. 69(1), pages 179-199, January.
    8. Jonathan Levin, 2011. "The Economics of Internet Markets," Discussion Papers 10-018, Stanford Institute for Economic Policy Research.
    9. Bruno Jullien & Alessandro Pavan, 2013. "Platform Competition under Dispersed Information," Discussion Papers 1568, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. Eraslan, Sercan & Schröder, Maximilian, 2019. "Nowcasting GDP with a large factor model space," Discussion Papers 41/2019, Deutsche Bundesbank.
    11. Alaimo, Cristina & Kallinikos, Jannis & Vallderama-Venegas, E, 2020. "Platforms as service ecosystems: lessons from social media," LSE Research Online Documents on Economics 101474, London School of Economics and Political Science, LSE Library.
    12. Gawer, Annabelle, 2014. "Bridging differing perspectives on technological platforms: Toward an integrative framework," Research Policy, Elsevier, vol. 43(7), pages 1239-1249.
    13. Ginger Zhe Jin & Marc Rysman, 2015. "Platform Pricing at Sports Card Conventions," Journal of Industrial Economics, Wiley Blackwell, vol. 63(4), pages 704-735, December.
    14. Mesak, Hani I. & Calloway, James A., 1995. "A pulsing model of advertising competition: A game theoretic approach, part A -- Theoretical foundation," European Journal of Operational Research, Elsevier, vol. 86(2), pages 231-248, October.
    15. Cong, Lin William & Li, Ye & Wang, Neng, 2022. "Token-based platform finance," Journal of Financial Economics, Elsevier, vol. 144(3), pages 972-991.
    16. Saul Estrin & Susanna Khavul & Mike Wright, 2022. "Soft and hard information in equity crowdfunding: network effects in the digitalization of entrepreneurial finance," Small Business Economics, Springer, vol. 58(4), pages 1761-1781, April.
    17. Charles Angelucci & Julia Cagé, 2019. "Newspapers in Times of Low Advertising Revenues," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 319-364, August.
    18. Jullien, Bruno & Pavan, Alessandro, 2013. "Platform Pricing under Dispersed Information," IDEI Working Papers 793, Institut d'Économie Industrielle (IDEI), Toulouse.
    19. Jabbour, Chady & Rey-Valette, Hélène & Maurel, Pierre & Salles, Jean-Michel, 2019. "Spatial data infrastructure management: A two-sided market approach for strategic reflections," International Journal of Information Management, Elsevier, vol. 45(C), pages 69-82.
    20. Maruyama Masayoshi & Zennyo Yusuke, 2013. "Compatibility and the Product Life Cycle in Two-Sided Markets," Review of Network Economics, De Gruyter, vol. 12(2), pages 131-155, June.

    More about this item

    Keywords

    advertising volumes; cyclical behavior; AR-processes; structural time series models.;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • L8 - Industrial Organization - - Industry Studies: Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-17-00140. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.