The Impact of Advertising on Media Bias

In this study, the authors investigate the role of advertising in affecting the extent of bias in the media. When making advertising choices, advertisers evaluate both the size and the composition of the readership of the different outlets. The profile of the readers matters since advertisers wish to target readers who are likely to be receptive to their advertising messages. It is demonstrated that when advertising supplements subscription fees, it may serve as a polarizing or moderating force, contingent upon the extent of heterogeneity among advertisers. When heterogeneity is large, each advertiser chooses a single outlet for placing ads (Single-Homing), and greater polarization arises in comparison to the case that media relies on subscription fees only for revenues. In contrast, when heterogeneity is small, each advertiser chooses to place ads in multiple outlets (Multi-Homing), and reduced polarization results. For intermediate levels of heterogeneity, some advertisers choose to Single-Home and others choose to Multi-Home