Skippable Ads: Interactive Advertising on Digital Media Platforms

45 Pages Posted: 15 May 2018 Last revised: 8 Sep 2021

See all articles by Anthony J. Dukes

Anthony J. Dukes

University of Southern California - Marshall School of Business

Qihong Liu

University of Oklahoma - Department of Economics

Jie Shuai

Zhongnan University of Economics and Law

Date Written: August 3, 2021

Abstract

Digital media platforms commonly use the skippable ad format, which gives a viewer the option to skip part of an advertisement after seeing some limited information, and jump directly to the desired content. It also enables these platforms to charge advertisers only when viewers attend to the entire ad. We develop a dynamic model of a viewer receiving incremental information from the advertiser and embed it in a two-sided market setting with an advertising market. Our results show that skippable ads can be less effective overall in converting existing viewers to advertisers. However, skippable ads bring more viewers to the platform and, in turn, induce more advertisers. This suggests that a switch to the skippable format is a profitable strategy for an emerging and growing platform, but not necessarily for one in a saturated market.

Keywords: Advertising, Commercial Media, Two-Sided Markets, Skippable Ads

JEL Classification: L12, L82, M37

Suggested Citation

Dukes, Anthony J. and Liu, Qihong and Shuai, Jie, Skippable Ads: Interactive Advertising on Digital Media Platforms (August 3, 2021). Available at SSRN: https://ssrn.com/abstract=3169629 or http://dx.doi.org/10.2139/ssrn.3169629

Anthony J. Dukes (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States
213-740-3846 (Phone)

HOME PAGE: http://sites.usc.edu/anthonydukes/

Qihong Liu

University of Oklahoma - Department of Economics ( email )

Norman, OK 73019-2103
United States
405-325-5846 (Phone)

HOME PAGE: http://qliu.oucreate.com

Jie Shuai

Zhongnan University of Economics and Law ( email )

182 Nanhu Ave.
East Lake High-tech Development Zone
Wuhan, Hubei 430073
China

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