Assistant Professor, University of British Columbia, Sauder School of Business, Strategy and Business Economics Divison
As a media economist, Ambarish Chandra is interested in whether audience segmentation of print media would increase advertising value, taken together with market competition.
This lecture is based on Chandra’s prior papers, which analyzed data of U.S. newspapers and German magazines. From his prior work, Chandra found advertising prices decline as the number of media decreases into a monopoly market.
Results further suggest that the more homogeneous reader profiles are a result of competition, the higher advertising prices media can charge. This finding applies to both newspapers and magazines.
Chandra concludes that print media need to think about raising advertising value per reader by keeping reader profiles concentrated, rather than worry about losing advertisers in a competitive market.
Does targeted advertising create value to media firms? What’s the role media plays in actually generating targeted advertising?
If newspapers and magazines can target audience better, they can charge higher advertising prices.
While online media are able to customize ads to right people by tracking down visitor profiles, for print media, it remains an interesting economic question of how to send a right set of ads to a given profile of consumers as online media do.
As newspaper competition increases, advertising price goes up as well. More media in the market result in more audience segments, which correlate to higher advertising prices.
Similar to newspapers, magazines are able to sell higher advertising prices if they cam keep readers’ profiles concentrated.
For both newspapers and magazines, demographic profiles matter. Keep readers homogeneous to attract more advertising dollars. By this way print media can capture better advertising value, rather than losing number of advertisers.
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