EXPRESS: Variety Effects in Mobile Advertising

Abstract

Users are often exposed to a sequence of short-lived marketing interventions (e.g., ads) within each usage session in mobile apps. This study examines how an increase in the variety of ads shown in a session affects a user's response to the next ad. The authors leverage the quasi-experimental variation in ad assignment in their data and propose an empirical framework that accounts for different types confounding to isolate the effects of a unit increase in variety. Across a series of models, the authors consistently show that an increase in ad variety in a session results in a higher response rate to the next ad: holding all else fixed, a unit increase in variety of the prior sequence of ads can increase the click-through rate on the next ad by approximately 13\%. The authors then explore the underlying mechanism and document empirical evidence for an attention-based account. The paper offers important managerial implications since it identifies a source of interdependence across ad exposures that is often ignored in the design of advertising auctions. Further, the attention-based mechanism suggests that platforms can incorporate real-time attention measures to help advertisers with targeting dynamics.