2.6. FURTHE R DIRECTIONS
This chapter has emphasized the theoretical insights from the recently developed liter-
ature on two-sided markets applied to the context of media markets. Big differences
in predictions arise in situations where consumers single-home (and the competitive bot-
tleneck of
Section 2.3.3 applies) from when consumers multi-home (as per Section 2.4).
More work would be welcome here: some preliminary thoughts in this regard are given
in
Section 2.4.5.
For empirical studies in the various types of media market, the reader is referred to the
various Chapters
3 and 7–9 (this volume). Clearly, more work that integrates the theory
and the empirics is strongly desirable.
While it is outside the scope of this chapter, we should mention the burgeoning lit-
erature on targeting. This literature is mostly motivated by the development of Internet
technologies and the increased ability to tailor advertising to individual preferences
revealed by consumers’ behavioral history. This literature develops explicit micro-
models for advertising and sales suited for discussing the effect of targeting on advertising
levels and prices.
63
Athey and Gans (2010) point out that expanding advertising messages may substitute
for targeting, and they thereby relate the effect of targeting on a platform’s revenue and
consumers to capacity constraints in the advertising markets or limited attention.
Bergemann and Bonatti (2011) develop a model of competitive advertising markets with
targeting and congestion. The accuracy of targeting has an inverse-U-shaped effect on the
price of advertising, which results from combining improved match values with increased
product concentration on each ad market.
Athey et al. (2014), discussed in Section 2.4.1,
explore further implications of tracking and targeting by competing platforms for adver-
tising contracts and platform’s technological choices.
Johnson (2013) examines the effect
of targeting when consumers have access to a costly advertising-avoiding technology.
Starting from no targeting, consumers dislike increasing accuracy of targeting due to a vol-
ume effect while they like it at high level of accuracy due to improved matches with adver-
tisers. While this literature is at its infant stage, it is a promising development for the future.
Although the recent literature has started to investigate advertising technologies in
depth, there is surprisingly little theoretical research on the tailoring of the content itself
to the needs of particular advertisers. Indeed, while the literature surveyed in
Section 2.1
relates the choice of content to ad revenue, it never relates consumers’ taste to the par-
ticular types of advertising shown on the platforms.
64
Recent exceptions are Athey and
63
For contributions analyzing the consequences of targeting on the advertised products’ market, see Esteban
et al. (2001)
, Gal-Or and Gal-Or (2005), Iyer et al. (2005), Galeotti and Moraga-Gonzalez (2008), De
Cornie
`
re (2010)
, Taylor (2013), De Cornie
`
re and de Nijs (2013), and Anderson et al. (2015a).
64
See Chandra (2009), Chandra and Kaiser (2014), and Goettler (1999) for empirical evidence on the adver-
tising value of audiences, and further discussion and references in
Chapter 5 (this volume).
86 Handbook of Media Economics
..................Content has been hidden....................
You can't read the all page of ebook, please click here login for view all page.