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Licensed Unlicensed Requires Authentication Published by De Gruyter September 13, 2018

The Value of Consumer Data in Online Advertising

  • Marc Bourreau , Bernard Caillaud and Romain de Nijs EMAIL logo

Abstract

In this paper we propose a model where consumer personal data have multidimensional characteristics, and are used by platforms to offer ad slots with better targeting possibilities to a market of differentiated advertisers through real-time auctions. A platform controls the amount of information about consumers that it discloses to advertisers, thereby affecting the dispersion of advertisers’ valuations for the slot. We first show by way of simulations that the amount of consumer-specific information that is optimally revealed to advertisers increases with the degree of competition on the advertising market and decreases with the cost of information disclosure for a monopolistic platform, competing platforms or a welfare-maximizing platform, provided the advertising market is not highly concentrated. Second, we exhibit different properties between the welfare-maximizing situation and the imperfectly competitive market situations with respect to how the incremental value of information varies: there are decreasing social returns to consumers’ data, while private returns may be increasing or decreasing locally.

Acknowledgement

This research has been financed by France Strategie, within the general framework of a Research Project on the “Evolution of the Value created by the Digital Economy and its Fiscal Consequences,” signed between France Strategie and a consortium consisting of PSE and Telecom ParisTech.

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Published Online: 2018-09-13
Published in Print: 2017-09-26

©2017 Walter de Gruyter GmbH, Berlin/Boston

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