The display advertising practice relies on the real-time exchange of large volumes of impressions. Advertisers and publishers typically carry out their transactions through Reservation contracts, Real Time Bidding (RTB), or a mixture of the two. The co-existence of multiple transaction methods is problematic since impression quality is difficult to assess. As such, the display advertising market is characterized by high uncertainty and asymmetric information. In this paper, we use viewability as a measure of impression quality and show how the co-existence of different transaction methods leads to allocation and pricing inefficiencies. Using bid-request level data from a European Demand Side Platform, we find that publishers who engage in both Reservation Contracts and RTB offer higher quality impressions through Reservation Contracts, while allocating the remaining lower quality impressions to RTB. We find that, by doing so, publishers can leverage on asymmetric information on impression quality to extract excess profit from advertisers.

Additional Metadata
Keywords Display Advertising, Impression Quality, Information Asymmetry, Programmatic Advertising, RTB
Persistent URL hdl.handle.net/1765/127077
Conference 40th International Conference on Information Systems, ICIS 2019
Citation
Balocco, F, & Li, T. (2020). Lemonads: Impression quality in programmatic advertising. In 40th International Conference on Information Systems, ICIS 2019. Retrieved from http://hdl.handle.net/1765/127077