Lecture 6 Flashcards
(19 cards)
Why is ad delivery often centralized?
Because it is typically managed through strategic platforms, though this lecture does not focus on their role.
What are the benefits of targeted advertising?
Improves consumer-product matching, reduces advertiser costs, and lowers search costs.
What are potential downsides of targeted advertising?
May increase prices due to higher WTP, soften competition through segmentation, and allow intermediaries to absorb rents.
What does Roy (2000) say about market segmentation in direct marketing?
Firms avoid overlapping segments and may charge monopoly prices, especially when marketing costs are high.
What limitation does Roy’s model have?
Assumes homogenous consumers, ignoring gains from targeting heterogenous preferences.
What does Bergmann and Bonatti (2011) find about targeted advertising?
Improved targeting increases welfare but may reduce ad revenue due to specialization and reduced competition for ad spots.
How does targeting affect consumer behavior according to De Cornière (2016)?
Consumers reduce search effort, increasing match quality and competition as firms lower prices to keep consumers.
What is a negative result of targeting via search engines?
Search engine fees may be embedded in prices, leading to suboptimal pricing.
What did Turow et al. (2009) find about consumer attitudes?
66% of US adults oppose tailored ads; 49% oppose tailored discounts; 57% oppose tailored news.
What are the two main reasons consumers reject targeted ads?
1) Price increases due to personalization, 2) Discomfort with intrusiveness.
What is psychological reactance?
A negative emotional response to perceived manipulation, leading consumers to act against the persuasion.
What did White et al. (2008) find about email targeting?
Highly personalized emails without justification reduce click-through rates.
What did Acquisti and Spiekermann (2011) find about interruptive ads?
They decrease consumers’ willingness to pay.
What did Goldfarb and Tucker (2011a) find about targeting and obtrusiveness?
Each independently increases purchase intent, but the combination reduces it, especially for sensitive products.
What did Goldfarb and Tucker (2011b) observe after the EU privacy directive?
Advertising effectiveness declined, especially for general content and unobtrusive ads.
What did Bleier and Eisenbeiss (2015) find about timing and placement of personalized ads?
Timing and context matter—DCP effectiveness varies, and placement on motive-congruent sites improves click-through.
What does Tucker (2014) find about control and ad effectiveness?
Perceived control over privacy enhances ad effectiveness even without changes to the ad content.
How can targeted advertising affect consumer surplus?
It can increase match value and efficiency but also raise prices and reduce competition.
How can firms reduce consumer reactance to targeted ads?
Avoid intrusive methods, use non-sensitive criteria, ensure proper timing/placement, and offer privacy control.
