TARGETED ADVERTISING: THE ROLE OF SUBSCRIBER CHARACTERISTICS IN MEDIA MARKETS*

This paper seeks to establish the importance of targeted advertising in media markets. Using zip‐code level circulation for U.S. newspapers, I show that newspapers facing more competition have lower circulation prices but higher advertising prices than similar newspapers facing little or no competition. I explain this by showing that newspapers in more competitive markets are better able to segment readers according to their location and demographics. This leads to greater homogeneity in the characteristics of subscribers and raises advertisers' willingness to pay for such readers. The results imply a substantial benefit to advertisers and media firms from targeted advertising.     

Tax-free digital news?

News platforms are struggling. Their printed readership is predominantly old, and their digital product struggles to win the attention of the young. For several decades tax reductions have been used in Europe to increase the circulation of printed newspapers. Would extending these reductions to digital platforms stimulate digital consumption? Using a two-sided pricing model where a print platform and a digital platform compete for multi-homing consumers and advertisers we show that the answer is no. The two-sidedness of the market means that the digital price would increase. Not only would digital circulation decrease but so too would the fraction of consumers that access news from both platforms. Key media policy goals of reach (circulation) and pluralism (multi-homing) would be harmed.     

Consumers and advertisers in the electronic marketplace: Implications for newspapers and other media

In the context of economic challenges faced by US daily newspapers, the author considers the potential of electronic information media. Despite the demand anticipations of system designers and operators, little is really known about consumer response to the media. Following an analysis of the strengths and weaknesses of the marketing ideology underlying the supposed demand for new home information services, it is stressed that the rate and degree of penetration, determined by what consumers and advertisers will be willing to pay, will be evolutionary rather than revolutionary. The author concludes that such media will gain slow and restrained acceptance in the light of social, economic and psychological constraints.     

The role of online platforms for media markets — Two-dimensional spatial competition in a two-sided market

We analyze the market for online and offline media in a model of two-dimensional spatial competition where media outlets sell content and advertising space. Consumer preferences are distributed along the style and type of news coverage where the distance costs may vary across dimensions. For integrated provision of online and offline platforms we show that entering the online market reduces average profits and may even constitute a prisoner's dilemma. Specialized provision may yield polarization in the style and type dimensions. This is in contrast to the maximum–minimum differentiation result previously established in the literature on multidimensional horizontal competition. We show that maximal differentiation in both dimensions occurs due to the discrete nature of the type dimension and asymmetric advertising markets.     

Freemium as optimal menu pricing

In online contents markets, content providers collect revenues from both consumers and advertisers by segmenting consumers who are willing to avoid advertisements and who are not. To analyze such situations, I construct a model of menu pricing by advertising platforms in two-sided markets. I find that, under certain condition, although a monopolistic platform can choose any menu of price-advertisement pairs, the optimal menu consists of only two services: ad-supported basic service and ad-free premium service. In addition, if the willingness to pay of advertisers is sufficiently high, the basic service is offered for free. This menu pricing is well known as freemium. Furthermore, this binary structure remains to hold under several extensions including duopoly platform competition.     

Structuring and contracting in competing supply chains

This paper considers two competing supply chains, each with multiple upstream suppliers producing complementary products and selling to a single buyer (e.g., assembler or retailer), who then sells the finished assembled product to a market that involves both demand uncertainty and competition. Our main research questions focus on what supply chain structure (integration vs. decentralization) and which contracting strategy a business should choose. We find that supply chains that decentralize perform better under strong market competition (i.e., high degree of product substitution between supply chains). However, when a large number of suppliers exist, supply chains that integrate perform better. When decentralized structures are used for both supply chains, a consignment with revenue sharing contract generally outperforms a wholesale price contract from the downstream retailer's point of view. Interestingly, for a supplier, a wholesale price contract, which pushes all demand risks to the downstream retailer, might not be preferred. For the entire supply chain, one contract strategy can outperform another depending on the degree of competition, the cost share of the buyer, and the number of suppliers.     

The stalemate of cable digital switchover: A study of competition effects and deregulation

This paper addresses the phenomenon of delayed cable digitization in Taiwan and reports the results of a longitudinal analysis, determining that (1) inter-platform competition, primarily from internet protocol television (IPTV), generates a strong and positive impact on the digitization of cable service after it acquires numerous customers; (2) the installed cable base induces economies of scale that increase its digital penetration; (3) the overbuild of the equivalent-size rivalry can increase digital adoption, whereas unequal-sized competition might reversely decrease it; and (4) the monthly flat fee charged to customers does not influence digital adoption. In addition, this paper presents a discussion on the policy instruments derived from econometric results. Although repealing the horizontal integration cap in the cable TV industry could generate economies of scale, doing so may encourage monopolization over several franchises. The efficacy of intra-platform competition is reserved only for certain cases. Combining the results of these analyses reveals that inter-platform competition most effectively stimulates cable operators’ digital conversion. Hence, regulators should create a level playing field among various TV platforms, such as equal programming access and open standards, to ensure a high degree of cable digitization     

Can a margin squeeze indicate the need for deregulation? The case of fixed network voice telephony markets

In the beginning of fixed network liberalisation in Europe in the late 1990s, the main concern of regulators was to lower retail call prices. This was done by introducing wholesale regulation and promoting service-based competition. Some years later, the concern of some regulators turned from too high retail call prices to too low call prices, which might ‘squeeze’ entrants out of the market. This paper looks at a simple model in which this development is explained by increasing competitive pressure from an ‘outside opportunity’, most notably mobile telephony and cable. It is concluded that a margin squeeze is not necessarily used by the incumbent as a device to drive competitors out of the market and to increase market power but can also result from increased inter-modal competition. If this is the case, it is argued that the appropriate response would be deregulation or – under particular circumstances – a switch from cost-oriented access prices to alternatives such as retail-minus or capacity-based interconnection.     

Consumers’ Reactions to Negative Information on Product Quality: Evidence from Scanner Data

Using daily scanner data we analyze consumers’ reactions to negative information with regard to product quality with reference to a fraud that involved a number of leading Italian firms in the cheese sector in 2008. We evaluate the effects of this event by using a difference-in-differences estimation strategy that compares the brands that were involved in the fraud with those that were uninvolved. It emerges that the negative news with regard to product quality induced consumers to shift their demand from involved to not involved brands. These effects persisted over time, even after the media stopped giving attention to the issue. Retailers suffered part of the costs of the bad news about product quality: the retail margin on brands that were mentioned adversely by the media decreased after the negative publicity.     

How Media Coverage of Corporate Social Irresponsibility Increases Financial Risk

Research summary: This article explores the relationship between corporate social irresponsibility (CSI) and financial risk. We posit that media coverage of CSI generates risk by providing conditions that increase the potential for stakeholder sanctions. Through analyzing an international panel of 539 firms during 2008–2013, we find that firms receiving higher CSI coverage face higher financial risk. We show that the reach of the reporting media outlet is a critical condition for this relationship. Once the outlet has a high reach, the severity of CSI coverage is a boundary condition that further reinforces the effect. Our findings complement existing theory about the risk‐mitigating effect of corporate social responsibility by illuminating the risk‐generating effect of CSI coverage. For executives, these insights suggest complementary strategies for corporate risk management. Managerial summary: This article examines the effect of negative news on financial risk. It shows that negative media articles regarding environmental, social, and governance (ESG) issues increase a firm's credit risk. It also provides a detailed analysis of the impact of an article's reach and severity, i.e., how many readers are exposed to the article and how harshly it criticizes the firm. The results allow to quantitatively assess the risk that emanates from negative ESG news. For executives, three strategies are derived for limiting a firm's exposure to this risk: balancing corporate social responsibility programs with operational safety programs, reporting suboptimal environmental and social performance transparently and proactively, and avoiding acquisition targets and markets with a legacy of negative news. Copyright © 2017 John Wiley & Sons, Ltd.     

How social media shapes the fashion industry: The spillover effects between private labels and national brands

Social media has become one of the major industrial marketing channels for companies. Because of the nature of social media, social media marketing produces a strong branding effect for small and medium enterprises (SMEs) in the fashion industry. This study contributes to social media analytics research by exploring the interactions between private labels and national brands in fashion social media and investigating how these interactions influence the popularity and subsequent sales of private labels. Our main findings suggest the presence of large national brands has a positive spillover effect on the popularity of private labels in fashion social media and ultimately influences sales of private label products. The results add to our understanding of the impact of Business-to-Business (B2B) social media marketing on brand competition in the fashion industry.     

Intermedia Substitutability and Market Demand by National Advertisers

We assess substitute and complementary relationships among eight national advertising media classes, as well as the magnitude of their own-price elasticities. We employ a translog demand model, whose parameters we estimate by three-stage least squares, based on 1960–94 annual U.S. data.We find aggregate demand by national advertisers for each of the eight media isown-price inelastic, and that cross-price elasticities suggest slightly more substitutethan complementary relationships, although both are rather weak. These patterns areconsistent with long prevailing institutional arrangements and media selection practices.     

Developing better industrial advertising

This paper reports on various factors that should be applied by industrial advertisers in order to improve their advertising effort. Topics on setting objectives, developing copy, designing the layout, and selecting media are covered in an applications-oriented way. The result is a concise approach of how industrial advertising can be more effective.     

Bertrand under Uncertainty: Private and Common Costs*

Does asymmetric information about costs in a homogeneous-good Bertrand model soften competition? Earlier literature has shown that the answer (perhaps counter-intuitively) is “no,” while assuming (i) private (i.e., independent) cost draws and (ii) no drastic innovations. I first show, in a fairly general setting, that by relaxing (i) and instead allowing for sufficiently much common (interdependent) cost draws, asymmetric information indeed softens competition. I then study a specification that yields a closed-form solution and show that relaxing (ii) but not (i) does not alter the result in the earlier literature. While relying on specific functional forms, this specification is quite rich and might be useful in applications. It allows for any (positive) degree of interdependence between the cost draws, for any demand elasticity, and for any number of firms. The closed-form solution is simple and in pure strategies.     

“Social food”: Food literacy co-construction and distortion on social media

Social media encourage the rapid spreading of food-related information and potentially act as a policy measure to improve food literacy, healthy eating and well-being. However, some authors warn about the lack of control over the quality of the shared information and the risks of knowledge distortion. The aim of this research is to understand how food literacy is co-constructed on social media and to identify the potential sources of bias, which lead to knowledge distortion. We use a netnographic approach (i.e. analysis of behavioral secondary data from social media and semi-structured interviews) to study both phenomena. Findings indicate that food literacy can be positively or negatively co-constructed in a social environment. Consumers can contribute to the construction of food literacy directly or indirectly on three levels (i.e. evaluation, adaptation suggestions and procedural critiques), which vary in depth and breadth of contribution. We further identify four types of biases, which risk affecting the quality of the co-constructed food literacy online, namely vividness, mindset, socio-cultural and cognitive dissonance bias. Findings help food policy makers to better understand how food literacy is developed outside of their control, and to identify the potential sources of knowledge distortion and how they can reduce these biases.     

International price comparisons: An area of further research

The keen interest by politicians, regulators, and competition authorities in international price rankings has sparked a series of management consultancies to produce regularly studies that purport to compare and rank prices for mobile wireless services across the world. These rankings, so they claim, are the Swiss Army knife of competition analysis. A country that ranks lower on a list is declared a laggard or noncompetitive and thus supposedly is in need of regulatory intervention. Such claims require scrutiny and further analysis. An accurate price comparison should follow the scientific method and include a testable hypothesis, a properly designed study methodology, and accurate data collection and interpretation. One such ranking exercise is produced biannually by Finnish management consultancy Rewheel. The present review fills a void with its analysis of the Rewheel study and suggests that it is a highly simplistic international price comparison exercise. The methodology of Rewheel assumes an unrealistic world where consumers only care about how much data they can get for a certain budget (i.e., price), and all other competitive differentiators (i.e., plan and quality differences) and costs differences (e.g., size of network built) are irrelevant.     

数字普惠金融与商业信用二次配置

商业信用二次配置是企业充当信用中介,将银行信贷等资金通过商业信用的渠道为供应链的上下游中小企业提供融资支持,这会导致资金供给链延长,加剧了供应链系统性风险,而数字普惠金融发展的重点在于为中小企业提供直接融资,因此,其能否抑制商业信用二次配置,对于防范金融风险和促进实体经济稳定发展具有重要意义。本文深入探讨了数字普惠金融对商业信用二次配置的影响及其作用机制,研究发现:数字普惠金融有助于降低商业信用二次配置,有效减少了企业利用商业信用把长期借款资金进行二次配置的行为,而且该抑制作用对于外部融资能力较强的企业更加明显。机制检验表明,数字普惠金融通过减少上市公司超额银行信贷抑制商业信用二次配置。进一步分析显示,在外部市场竞争程度较低、内部风险较低、现金持有水平较高以及非高科技企业中,数字普惠金融对上市公司商业信用二次配置的抑制作用更加明显;而且,数字普惠金融在降低商业信用二次配置的同时,对于促进企业创新投入具有一定的积极作用。本文研究表明,数字普惠金融通过增加中小企业直接融资,减少了资金供给的中间环节,进而抑制大型企业充当"影子银行"进行资金的二次配置。     

Mergers when firms compete by choosing both price and promotion

We analyze the bias from predicting merger effects using structural models of price competition when firms actually compete using both price and promotion. We extend the standard merger simulation framework to allow for competition over both price and promotion and ask what happens if we ignore promotional competition. This model is applied to the super-premium ice cream industry, where a merger between Nestlé and Dreyer's was challenged by the Federal Trade Commission. We find that ignoring promotional competition significantly biases the predicted price effects of a merger to monopoly (5% instead of 12%). About three-fourths of the difference can be attributed to estimation bias (estimated demand is too elastic), with the remainder due to extrapolation bias from assuming post-merger promotional activity stays constant (instead it declines by 31%).     

Are USDA reports still news to changing crop markets?

This study investigates whether major USDA reports still provide important news to changing crop markets. The news component of each report, or market “surprise,” is measured as a difference between the USDA estimate and its private expectation in corn, soybeans, and wheat markets. Changes in the relevance of USDA information are assessed by examining changes in the magnitude of market surprises and shifts in the futures price reaction to these surprises, which isolates the impact of each report. The stable size of market surprises over time suggests that competition from alternative data sources has not reduced the news component of USDA crop reports. Increasing price reaction to most reports, including those facing competition from alternative information sources, suggests that value of public information may be enhanced in uncertain markets affected by structural changes.     

奥美的“算法”

广告业要变天了吗?要被互联网颠覆了吗?广告公司如何改变才能应对未来?在更多的选择面前,传统广告业似乎正走向终结,其传播理论正在经历关乎生死存亡的挑战。宣导型的、通过大众传媒建立并传播品牌的方式正在失效。社交媒体对人们生活的全面覆盖,将促使人们通过更碎片化的方式接触品牌。此一时,彼一时。全球4A公司曾是传统广告业的翘楚和代表,现在他们似乎被置于尴尬的境地。传统广告曾是人力密集型行业,现在广告主有了更多选择。Victors&Spoils这家公司一开始就没有员工,之后的人员也十分精简,主要基于"众包"的方式与40多家公司合作。这家公司2009年建立,已经获