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Online Advertising: Heterogeneity and Conflation in Market Design
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Journal Article
Online Advertising: Heterogeneity and Conflation in Market Design
2010
Overview
We introduce the idea of conflation, in which similar but distinct products are treated as identical in order to make markets thick or reduce cherry-picking. We report some illustrative anecdotes of how excessive ad targeting can work out badly. We then describe some trade-offs in designing online advertising markets, and the ingredients for a theory of the optimal market organization. One approach to keeping participants safe is for an Internet publisher to offer a contract providing its advertiser with a representative cross section of impressions across a relatively broad target audience. An alternative approach to conflation is to limit too-narrow targeting of small sets of impressions. Such an approach aims to resolve the trade-off between targeting and market thickness.
