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Competition and Specificity in Market Design: Evidence from Geotargeted Advertising

Author

Listed:
  • Bo Cowgill

    (Columbia University)

  • Cosmina Dorobantu

    (Columbia University, Oxford University and The Alan Turing 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.

Suggested Citation

  • Bo Cowgill & Cosmina Dorobantu, 2018. "Competition and Specificity in Market Design: Evidence from Geotargeted Advertising," Working Papers 18-09, NET Institute, revised Sep 2018.
    • Handle: RePEc:net:wpaper:1809
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    References listed on IDEAS

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    More about this item

    Keywords

    fixed-to-mobile substitution; incumbency advantage; broadband access;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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