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Pricing of display advertising as indication of the roots of market power of the digital platforms

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  • S. V. Bovt
  • S. B. Avdasheva

Abstract

Multi-sided digital platforms such as GAFAM (Google, Apple, Facebook, Amazon, Microsoft) provide services at zero cost by monetizing user attention and data through advertising. Testing the hypotheses on the determinants of display advertising price set by three largest digital platforms — Google, YouTube and Facebook, — contributes to the explanations of the roots of platforms market power. During the period from January 2018 to March 2024 cost per mile (CPM) increases with the number of unique visitors and traffic (total visits), as well as with the time that the user spends on the platform. However, the second effect is more pronounced. We interpret this result as an evidence that the market power in digital advertising depends more on the data of particular user’s preferences (digital footprint) and therefore on the ability to personalize advertising messages than on the number of users and data traffic on the platforms. The results high-light the economic value of personal data under monetization of cross-platform externalities through digital advertising.

Suggested Citation

  • S. V. Bovt & S. B. Avdasheva, 2024. "Pricing of display advertising as indication of the roots of market power of the digital platforms," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 12.
    • Handle: RePEc:nos:voprec:y:2024:id:5142
    DOI: 10.32609/0042-8736-2024-12-110-130
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