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Skippable Ads: Interactive Advertising on Digital Media Platforms

Author

Listed:
  • Anthony Dukes

    (Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Qihong Liu

    (Department of Economics, University of Oklahoma, Norman, Oklahoma 73019)

  • Jie Shuai

    (Wenlan School of Business, Zhongnan University of Economics and Law, Wuhan 430073, China)

Abstract

Digital media platforms commonly use the skippable ad format, which gives a viewer the option to skip part of an advertisement after seeing some limited information and jump directly to the desired content. It also enables these platforms to charge advertisers only when viewers attend to the entire ad. We develop a dynamic model of a viewer receiving incremental information from the advertiser and embed it in a two-sided market setting with an advertising market. Our results show that skippable ads can be less effective overall in converting existing viewers to advertisers. However, skippable ads bring more viewers to the platform and, in turn, induce more advertisers. This suggests that a switch to the skippable format is a profitable strategy for an emerging and growing platform but not necessarily for one in a saturated market.

Suggested Citation

  • Anthony Dukes & Qihong Liu & Jie Shuai, 2022. "Skippable Ads: Interactive Advertising on Digital Media Platforms," Marketing Science, INFORMS, vol. 41(3), pages 528-547, May.
    • Handle: RePEc:inm:ormksc:v:41:y:2022:i:3:p:528-547
    DOI: 10.1287/mksc.2021.1324
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