The Implications of Improved Attribution and Measurability for Online Advertising Markets

Catherine Tucker November 20, 2012

Abstract Digital data has transformed the ability of advertisers to assess the performance of their online paid and display advertising campaigns. This has led to the launch of a new breed of technologies allowing cross-channel attribution. These technologies allow advertisers for the rst time to compare the performance of ads across dierent types of advertising channels and assess which campaigns are the most successful at achieving their goals. The theoretical literature in economics suggests that the improvements in measurability implied by the collection of digital data should both make switching between media platforms easier and reduce prices for advertisers. This implies positive welfare consequences. This paper explores whether there is empirical support for these theories. The paper nds evidence that advertisers are able to use these attribution technologies to substitute towards advertising campaigns across dierent platforms that lead to more conversions at a lower price. Specically, these technologies allow advertisers to develop more rened targeting criteria, which helps them to avoid paying high prices. This suggests that there may be unforeseen costs to policies that reduce the ability of advertisers to measure the comparative performance of their advertising.

Catherine Tucker is Associate Professor of Marketing at MIT Sloan School of Management, Cambridge, MA, and Research Associate at the NBER. All errors are my own. I thank Google for nancial support for this project.