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Online Auctions and Digital Marketing Agencies

Author

Listed:
  • Francesco Decarolis

    (Einaudi Institute for Economics and Finance, Via Sallustiana, 62, Rome, Italy)

  • Gabriele Rovigatti

    (University of Chicago Booth School of Business, 5807 S. Woodlawn Ave, Chicago, IL)

Abstract

We present an empirical investigation of the role of marketing agencies in Google’s online ad auctions. By combining data on advertisers’ affiliation to marketing agencies with data on bidding in ad auctions, we analyze how changes in the concentration of clients in the same industry under the same ad network are associated with changes in keyword bidding in terms of entry, exit, and pricing strategies. Moreover, by exploiting the case of a recent merger between agencies, we estimate through a difference-in-differences strategy that an increase in concentration leads to reduction in the average cost-per-click of the keywords affected by the merger.

Suggested Citation

  • Francesco Decarolis & Gabriele Rovigatti, 2017. "Online Auctions and Digital Marketing Agencies," Working Papers 17-08, NET Institute.
    • Handle: RePEc:net:wpaper:1708
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    References listed on IDEAS

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    Cited by:

    1. Xinyu Cao & T. Tony Ke, 2019. "Cooperative Search Advertising," Marketing Science, INFORMS, vol. 38(1), pages 44-67, January.

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    More about this item

    Keywords

    Online Advertising; Internet Auctions; Marketing Agency; Ad Network; Agency Trading Desk;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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