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Advertising and Content Differentiation: Evidence from YouTube

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  • Anna Kerkhof

Abstract

Many media outlets depend on advertising revenue to finance their operations, but the effect of advertising on media outlets’ content choice is largely unexplored. This paper exploits two institutional features from YouTube to show that an exogenous increase in advertising quantity induces YouTubers to differentiate their video content from their competitors. A plausible mechanism is that YouTubers avoid competition: Viewers typically perceive advertising as a nuisance and therefore as an implicit price they have to pay; thus, they could switch to a competitor if a YouTuber increased her advertising quantity. This is less likely, however, if the YouTuber differentiates her content from the mainstream and moves to a niche.

Suggested Citation

  • Anna Kerkhof, 2020. "Advertising and Content Differentiation: Evidence from YouTube," CESifo Working Paper Series 8697, CESifo.
    • Handle: RePEc:ces:ceswps:_8697
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    1. Guy Aridor & Rafael Jiménez-Durán & Ro'ee Levy & Lena Song, 2024. "The Economics of Social Media," CESifo Working Paper Series 10934, CESifo.

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    More about this item

    Keywords

    advertising; content differentiation; economics of digitization; horizontal product differentiation; long tail; media diversity; user-generated content; YouTube;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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