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The Economics of the Online Advertising Industry

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  • Evans David S.

    () (LECG)

Abstract

Internet-based technologies are revolutionizing the stodgy $625 billion global advertising industry. There are a number of public policy issues to consider. Will a single ad platform emerge or will several remain viable? What are the consequences of alternative market structures for a web economy that is increasingly based on selling eyeballs to advertisers? This article describes the online advertising industry. The industry is populated by a number of multi-sided platforms that facilitate connecting advertisers to viewers. Search-based advertising platforms, the most developed of these, have interesting economic features that result from the combination of keyword bidding by advertisers and single-homing.

Suggested Citation

  • Evans David S., 2008. "The Economics of the Online Advertising Industry," Review of Network Economics, De Gruyter, vol. 7(3), pages 1-33, September.
  • Handle: RePEc:bpj:rneart:v:7:y:2008:i:3:n:2
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    Citations

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    Cited by:

    1. Claussen, Jörg & Kretschmer, Tobias & Mayrhofer, Philip, 2010. "Private Regulation by Platform Operators – Implications for Usage Intensity," Discussion Papers in Business Administration 11374, University of Munich, Munich School of Management.
    2. Emanuele Tarantino, 2012. "A Note on Vertical Search Engines’ Foreclosure," Chapters,in: Recent Advances in the Analysis of Competition Policy and Regulation, chapter 8 Edward Elgar Publishing.
    3. Yi Zhu & Kenneth C. Wilbur, 2011. "Hybrid Advertising Auctions," Marketing Science, INFORMS, vol. 30(2), pages 249-273, 03-04.
    4. Tarantino, Emanuele, 2013. "A simple model of vertical search engines foreclosure," Telecommunications Policy, Elsevier, vol. 37(1), pages 1-12.
    5. Justus Haucap & Torben Stühmeier, 2016. "Competition and antitrust in Internet markets," Chapters,in: Handbook on the Economics of the Internet, chapter 9, pages 183-210 Edward Elgar Publishing.
    6. Li, Sanxi & Peitz, Martin & Zhao, Xiaojian, 2016. "Information disclosure and consumer awareness," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 209-230.
    7. Dolata, Ulrich, 2017. "Apple, Amazon, Google, Facebook, Microsoft: Market concentration - competition - innovation strategies," Research Contributions to Organizational Sociology and Innovation Studies, SOI Discussion Papers 2017-01, University of Stuttgart, Institute for Social Sciences, Department of Organizational Sociology and Innovation Studies.
    8. Yoon Kiho, 2010. "Optimal Quality Scores in Sponsored Search Auctions: Full Extraction of Advertisers' Surplus," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-11, July.
    9. Dolata, Ulrich, 2014. "Märkte und Macht der Internetkonzerne: Konzentration - Konkurrenz - Innovationsstrategien," Research Contributions to Organizational Sociology and Innovation Studies, SOI Discussion Papers 2014-04, University of Stuttgart, Institute for Social Sciences, Department of Organizational Sociology and Innovation Studies.
    10. Lai, Puqing, 2014. "Utilizing the access value of customers," Business Horizons, Elsevier, vol. 57(1), pages 61-71.
    11. Claussen, Jörg & Kretschmer, Tobias & Mayrhofer, Philip, 2010. "Incentives for Quality over Time – The Case of Facebook Applications," Discussion Papers in Business Administration 12500, University of Munich, Munich School of Management.
    12. Justus Haucap & Torben Stühmeier, 2016. "Competition and antitrust in Internet markets," Chapters,in: Handbook on the Economics of the Internet, chapter 9, pages 183-210 Edward Elgar Publishing.
    13. Yi Zhu & Kenneth C. Wilbur, 2008. "Strategic Bidding in Hybrid CPC/CPM Auctions," Working Papers 08-25, NET Institute, revised Oct 2008.
    14. David S. Evans, 2009. "The Online Advertising Industry: Economics, Evolution, and Privacy," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 37-60, Summer.
    15. Ogidi, Odun & Anthony U. Utulu, 2016. "Is the New Media Superior to the Traditional Media for Advertising," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 4(1), pages 57-69, March.
    16. Cristiano Codagnone & Fabienne Abadie & Federico Biagi, 2016. "The Future of Work in the ‘Sharing Economy’. Market Efficiency and Equitable Opportunities or Unfair Precarisation?," JRC Working Papers JRC101280, Joint Research Centre (Seville site).
    17. Jan KRÄMER & Michael WOHLFARTH, 2015. "Regulating Over-the-Top Service Providers in Two-Sided Content Markets: Insights from the Economic Literature," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(99), pages 71-90, 3rd quart.
    18. Øiestad, Sara & Bugge, Markus M., 2014. "Digitisation of publishing: Exploration based on existing business models," Technological Forecasting and Social Change, Elsevier, vol. 83(C), pages 54-65.
    19. Budzinski, Oliver, 2016. "Aktuelle Herausforderungen der Wettbewerbspolitik durch Marktplätze im Internet," Ilmenau Economics Discussion Papers 103, Ilmenau University of Technology, Institute of Economics.

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