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Targeted Advertising Strategies on Television

Published: 01 May 2006 Publication History

Abstract

The personal video recorder (PVR) facilitates the use of targeted advertising by allowing companies to monitor television viewing behavior and to build demographic profiles of viewers from the data that are collected. Our research explores the extent to which an advertiser should allocate resources to increase the quality of its targeting. We present a game-theoretic model that extends the conventional measurement of targeting quality by exploring the trade-off between two measures: accuracy and recognition. Accuracy measures the likelihood that any target segment prediction is correct, while recognition conversely measures the likelihood that any member of the target segment is identified. We find that the relative resources allocated to improving accuracy and recognition depend upon the size of the population of viewers, the propensity of viewers to skip commercials, the overall cost of airing commercials, and the competitive environment. Furthermore, the incentives to improve accuracy are markedly different from those to improve recognition. Although improving accuracy does not affect the extent of price competition, improving recognition leads to intensified price competition and reduced profitability in the product market. Thus, when facing a competitor that pursues a strategy to improve its recognition of potential customers, an advertiser should choose to reduce its investment in recognition and increase its investment in accuracy.

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  • (2020)Analysis of Advertising Strategy of Enterprises and Advertising Platforms under Clicking FraudProceedings of the 2020 3rd International Conference on E-Business, Information Management and Computer Science10.1145/3453187.3453315(73-78)Online publication date: 5-Dec-2020
  • (2020)Distinct role of targeting precision of Internet-based targeted advertising in duopolistic e-business firms’ heterogeneous consumers marketElectronic Commerce Research10.1007/s10660-019-09388-x20:2(453-474)Online publication date: 1-Jun-2020
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    Information & Contributors

    Information

    Published In

    cover image Management Science
    Management Science  Volume 52, Issue 5
    May 2006
    173 pages

    Publisher

    INFORMS

    Linthicum, MD, United States

    Publication History

    Published: 01 May 2006

    Author Tags

    1. addressable advertising
    2. game theory
    3. media content distributor
    4. price competition
    5. skipping commercials
    6. targeting measures

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    • (2024)An empirical study on the impact of main metrics of Amazon advertising on ROI based on StataProceedings of the 2024 Guangdong-Hong Kong-Macao Greater Bay Area International Conference on Digital Economy and Artificial Intelligence10.1145/3675417.3675433(91-95)Online publication date: 19-Jan-2024
    • (2020)Analysis of Advertising Strategy of Enterprises and Advertising Platforms under Clicking FraudProceedings of the 2020 3rd International Conference on E-Business, Information Management and Computer Science10.1145/3453187.3453315(73-78)Online publication date: 5-Dec-2020
    • (2020)Distinct role of targeting precision of Internet-based targeted advertising in duopolistic e-business firms’ heterogeneous consumers marketElectronic Commerce Research10.1007/s10660-019-09388-x20:2(453-474)Online publication date: 1-Jun-2020
    • (2018)The Role of User Privacy Concerns in Shaping Competition Among PlatformsInformation Systems Research10.1287/isre.2017.073029:3(698-722)Online publication date: 1-Sep-2018
    • (2015)Bidirectional Role of Accuracy and Recognition in Internet-Based Targeted AdvertisingJournal of Electronic Commerce in Organizations10.4018/jeco.201501010413:1(50-66)Online publication date: 1-Jan-2015
    • (2014)An economic analysis of online advertising using behavioral targetingMIS Quarterly10.25300/MISQ/2014/38.2.0538:2(429-450)Online publication date: 1-Jun-2014
    • (2012)Competitive Effects of Purchase-Based Targeted AdvertisingJournal of Electronic Commerce in Organizations10.4018/jeco.201210010610:4(71-84)Online publication date: 1-Oct-2012
    • (2012)How effective is targeted advertising?Proceedings of the 21st international conference on World Wide Web10.1145/2187836.2187852(111-120)Online publication date: 16-Apr-2012
    • (2011)Adoption versus use diffusion of iDTV in flanders - personalized television content as a tool to cross the chasm?Computers in Entertainment10.1145/2027456.20274669:3(1-15)Online publication date: 14-Nov-2011
    • (2010)Bundling Strategies When Products Are Vertically Differentiated and Capacities Are LimitedManagement Science10.1287/mnsc.1100.124256:12(2207-2223)Online publication date: 1-Dec-2010
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