How Can Online Advertisers Get the Most Mileage for Their Money?

Advertisers often use multiple publishers for their online campaigns, but many are not using the best metrics to decide which publishers they should compensate, new Wharton research shows. Research by Wharton marketing professor Ron Berman finds that the “last touch” or “last click” method advertisers typically employ to compensate publishers is the wrong way to go about it. Berman’s research shows that the “last click” method entails a moral hazard in driving “adverse selection,” where publishers show ads to consumers who would buy the product anyway. The resulting competition between publishers “creates a race to try and cheat the advertiser out of money,” he says. It also encourages free riding by some publishers on the efforts of others, just so that they can collect the credit and compensation for showing the last ad to the consumer making the purchase.

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