Compete, Cooperate, or Coopete? The Strategic Role of Data Analytics in Targeted Advertising
The widespread use of data analytics has profoundly reshaped the competitive landscape of online targeted advertising. Many demand-side platforms (DSP) that provide ad delivery for advertisers have integrated a data management platform (DMP) to become hybrid firms. The DMP performs data analytics to derive consumer insights that can increase the targeting accuracy of ad firms. This study builds an analytical model to examine the strategic interactions among the hybrid firm, the standalone DSP firm, and advertisers. Specifically, we investigate under what conditions the hybrid firm can leverage its data analytics capabilities to compete, cooperate, or coopete with the standalone DSP firm. We identify counter-intuitive cases in which one strategy (e.g., coopetition) can outperform the other strategies. We show that the level of data analytics, the degree of compatibility between the hybrid firm's DMP service and the standalone DSP firm, the mismatch cost of advertisers, and the marginal cost of the DSP service of the hybrid firm collectively define the optimal interaction and pricing strategies of firms and affect advertisers' surplus, sometimes in an unexpected direction. In addition, we show that the hybrid firm can provide discriminatory levels of data analytics in the coopetition strategy. Moreover, a new DMP entrant can motivate the hybrid firm to cooperate more and engage in less direct competition with the standalone DSP firm. Finally, the hybrid firm can strategically focus on advertisers operating in a niche market (rather than the mass market). We also discuss the theoretical and managerial implications of our results
Year of publication: |
2020
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Authors: | Zhang, Xin |
Other Persons: | Zhang, Ran (Alan) (contributor) ; Yue, Wei Thoo (contributor) ; Yu, Yugang (contributor) |
Publisher: |
[2020]: [S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (47 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprĂĽngliche Fassung des Dokuments March 6, 2020 erstellt |
Other identifiers: | 10.2139/ssrn.3549642 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012840101
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