Changing Dynamics of Ads
In class we learned about a special type of market regarding online ads. This involved advertisers bidding for spots on webpages that lead to peaks and valleys of prices paid for ad spaces. Most of the values that advertisers assigned to various ad spaces was the viewability of the ad real estate. However the bids that advertisers make are based on their value of the corresponding space e.g. the viewability. However if the values that they’re expecting from an ad space are different from the actual ad space there is a problem because they can no longer make accurate bids corresponding to the value and their own value. It also creates market clearing problems as well.
In the corresponding article, it discusses the problems with assigning proper values to ad space due to lack of information. The problem with many adspaces currently is that the viewability numbers they were given have been shown to be fraudulent. This is a result of a variety of factors such as fake reporting, spam viewing, or ad spaces that were hidden. In addition to just fake reporting the actual value of viewability has declined over time as well as online ads have permeated through the internet. Even though an ad space may seem to have a lot of viewability, it often does not correspond to more hits. In addition, online ads seem to actually be bothering viewers of said webpages leading to negative opinions of the company and its ad.
All these factors make establishing a market and prices for consumers of ad spaces very difficult. The data that they use to measure their value of an adspace is often fraudulent. The value of viewability has also been changing significantly from how it was originally. In addition, there are new costs associated with their advertising due to the negative opinion of consumers.