The Relationship Between Advertising And Content Provision On The Internet

4468 words - 18 pages

Advertising and content on the
The relationship between advertising and content
provision on the Internet Yuehong Yuan, Jonathan P. Caulkins and Stephen Roehrig
H.J. Heinz III School of Public Policy and Management, Carnegie Mellon University, Pittsburgh, Pennsylvania, USA
Introduction The distinction between advertising and content may sometimes seem to be blurred on the Net. Consider, for example, the majority of company Web sites, which provide information about the companies and their products and services. From the point of view of their customers and investors, the company and product information is "content", while from the companies' perspective, it is "advertising" intended to induce purchases of their products or stocks.
This paper explores the question of whether the traditional practice of bundling advertisements with content will prevail or become less common on the Internet. Given that revenue from advertisers is desirable to content providers, the answer mainly depends on whether advertisers will choose to deliver their advertisements by bundling. The decision to bundle in turn depends on the response of customers to bundling and to other advertising strategies. In particular, the relationship between advertising and content provision on the Internet may be affected by this medium's distinctive characteristics, which affect the choices of advertisers and the response of customers. Thus, one needs to investigate the choices of advertisers, the behavior of customers, and their dependence on the distinctive technological features of the Internet.
This paper pursues that investigation as follows. First, we propose a classification scheme of advertising strategies relevant to the analysis of bundling. Second, we describe customer behavior in terms of search and blocking. Third, we analyse advertisers' choices of advertising strategy on the Internet to see whether bundling will be a preferred strategy. Fourth, we look at some empirical evidence.
Alternative advertising strategies Advertising has often been categorized according to adopted media (e.g. newspaper versus television), targeted audience (e.g. consumers versus businesses), targeted region (national versus regional), purpose (image versus product promotion), and type of advertiser (public versus commercial companies) (see e.g. Bovee and Arens, 1992). However, these classifications are
European Journal of Marketing, Vol. 32 No. 7/8, 1998, pp. 677-687,
© MCB University Press, 0309-0566

European Journal of Marketing 32,7/8
not well suited for analysing the bundling decision. In the following, we propose a classification of advertising strategies useful for the analysis of this decision.
Direct advertising versus indirect advertising Advertisers may try to deliver advertisements directly to the attention of potential customers or simply make them available and let customers access them at will. The former can be called "direct advertising" (e.g. telephone...

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