This paper analyzes the impact of intermediaries' concentration on the allocation of revenues in online platforms. We study sponsored search - the sale of ad space on search engines through online auctions - documenting how advertisers increasingly bid through a handful of specialized intermediaries. This enhances automated bidding and data pooling, but lessens competition whenever the intermediary represents competing advertisers. Using data on nearly 40 million Google's keyword-auctions, we first apply machine learning algorithms to cluster keywords into thematic groups serving as relevant markets. Then, through an instrumental variable strategy, we quantify a negative and sizeable impact of intermediaries' concentration on platform's revenues.

From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising

Francesco Decarolis;Gabriele Rovigatti
2019

Abstract

This paper analyzes the impact of intermediaries' concentration on the allocation of revenues in online platforms. We study sponsored search - the sale of ad space on search engines through online auctions - documenting how advertisers increasingly bid through a handful of specialized intermediaries. This enhances automated bidding and data pooling, but lessens competition whenever the intermediary represents competing advertisers. Using data on nearly 40 million Google's keyword-auctions, we first apply machine learning algorithms to cluster keywords into thematic groups serving as relevant markets. Then, through an instrumental variable strategy, we quantify a negative and sizeable impact of intermediaries' concentration on platform's revenues.
2019
Decarolis, Francesco; Rovigatti, Gabriele
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/4021996
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