Working Paper: CEPR ID: DP15130
Authors: Simon P. Anderson; Martin Peitz
Abstract: We introduce advertising congestion along with a time-use model of consumer choice among media. Both consumers and advertisers multi-home. Higher equilibrium advertising levels ensue on less popular media platforms because platforms treat consumer attention as a common property resource: smaller platforms internalize less the congestion from advertising and so advertise more. Platform entry raises the ad nuisance "price" to consumers and diminishes the quality of the consumption experience on all platforms. With symmetric platforms, entry still leads to higher consumer benefits. However, entry of less attractive platforms can increase ad nuisance levels so much that consumers are worse off.
Keywords: Media Economics; Advertising Clutter; Limited Attention; Information Congestion; Two-Sided Markets
JEL Codes: D43; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| advertising congestion (L91) | higher equilibrium advertising levels on less popular media platforms (D49) |
| platform entry (D26) | raises ad nuisance price to consumers (L97) |
| raises ad nuisance price to consumers (L97) | diminishes quality of consumption experience across all platforms (L15) |
| platform entry (D26) | consumer welfare (D69) |
| increased media diversity (L82) | reduced fraction of time consumers encounter content on any given platform (D16) |
| reduced fraction of time consumers encounter content on any given platform (D16) | increased ad clutter (M37) |
| increased ad clutter (M37) | negatively impacting consumer experience (F61) |