Economic Analysis of Reward Advertising

• 成果类型: Article
• 署名作者: Guo, Hong; Zhao, Xuying; Hao, Lin; Liu, De
• 署名单位: University of Notre Dame; University of Washington; University of Washington Seattle; University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13015
• 发表日期: 2019
• 页码: 2413-2430
• 关键词: reward advertising; apps; Monetization; premium content; consumer surplus

摘要

Reward advertising is an emerging monetization mechanism for app developers in which consumers choose to view ads in exchange for apps' premium content. We provide the first economic analysis of reward advertising by studying the implications of offering reward ads, either by itself, or in conjunction with direct selling of premium content. We find that the condition for offering reward ads is surprisingly simple, and it is often optimal to offer reward ads jointly with direct selling of premium content. Interestingly, a high reward rate could decrease the number of reward ads viewed because of accelerated satiation for premium content; thus, developers need to balance the need to incentivize ad viewing and to prevent excessive accelerated satiation. The need for limiting the number of reward ads per consumer only arises when the marginal revenue of reward ads diminishes quickly. Such limit is only effective when the base ad revenue rate is not too high and when ad viewers have relatively homogenous nuisance costs. Finally, reward ads may increase or decrease consumer surplus.