Designing Information and Entertainment-Oriented Publications: Balancing Advertising and Programming Content

29 Pages Posted: 15 Apr 2009

See all articles by Hemant K. Bhargava

Hemant K. Bhargava

University of California, Davis

Juan Feng

University of Florida - Warrington College of Business Administration

Date Written: March 25, 2009

Abstract

Advertising is an important revenue source for many publishers of information and entertainment-oriented good and services on the Internet, television, and print media. The publication design must balance the revenue opportunity from advertising with its impact on consumers' perception of the publisher. We study a publisher's optimal strategy when viewers' attitude towards advertising friendly or hostile - varies along the amount of advertising and on the publisher's programming quality. The publisher's program quality impacts how much flexibility it has in balancing advertising revenues with making the best product for its subscribers. Among competing publishers, the one with higher programming quality, or larger consumer base, has more flexibility in setting its advertising level. Regulation that limits publishers' advertising levels is not necessarily in the subscribers' interest: even a monopoly publisher may offer too little advertising relative to the consumer ideal; this can happen when advertising enhances the consumer experience but is too costly to attract. We explain how the potential to generate non-advertising revenues from subscribers affects the publisher's advertising level, and how it might cause variation in advertising levels among publishers who experience the same consumer attitude towards advertising.

Keywords: media markets, publisher design, advertising policy, content management

Suggested Citation

Bhargava, Hemant K. and Feng, Juan, Designing Information and Entertainment-Oriented Publications: Balancing Advertising and Programming Content (March 25, 2009). UC Davis Graduate School of Management Research Paper No. 09-05, Available at SSRN: https://ssrn.com/abstract=1381005 or http://dx.doi.org/10.2139/ssrn.1381005

Hemant K. Bhargava (Contact Author)

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Juan Feng

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States