3 research outputs found

    The Effect of Third Party Investigation on Pay-Per-Click Advertising

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    Click fraud is a critical problem in pay-per-click advertising. While both service providers (SPs) and advertisers employ technologies to identify fraudulent clicks, prior work shows that they cannot be induced to make further improvements to their respective technologies. We consider the use of third-party investigation to address this problem and examine whether the responsibility of investigation payments helps induce both parties to work towards improving their technologies unilaterally. Using a principal-agent setting, we show that the advertiser always has incentives to improve his verification technology and the SP will improve his detection technology only when the detection cost is not too large. Given that the cost of detection technology is likely to be small due to the use of inexpensive online filters, our result suggests that third-party investigation helps induce further enhancements to the technologies and is a good mechanism to address the incentive problems in the click fraud setting

    Inefficiencies in Digital Advertising Markets

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    Digital advertising markets are growing and attracting increased scrutiny. This article explores four market inefficiencies that remain poorly understood: ad effect measurement, frictions between and within advertising channel members, ad blocking, and ad fraud. Although these topics are not unique to digital advertising, each manifests in unique ways in markets for digital ads. The authors identify relevant findings in the academic literature, recent developments in practice, and promising topics for future research
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