SOCIETÀ ITALIANA DI DIRITTO ED ECONOMIA
Svetlana Bovt (National Research University Higher School of Economics)
Svetlana Avdasheva (National Research University Higher School of Economics)
Abstract
The adoption of laws such as the DMA, DSA, and CMA, along with various data protection regulations like GDPR, positions digital advertising at the forefront of antitrust discussions for several reasons. Digital platforms, notably Google, can influence pricing through algorithmic auctions and targeted advertising. The advantage of this study lies in its exploration of competition factors that explain digital advertising prices.
By analyzing empirical data from multiple countries regarding Google Display, YouTube, and Facebook, the study identifies key factors impacting advertising prices, particularly cost per mille (CPM). These factors include user engagement metrics, conversion rates, and market share. We analyze multiple variables using various econometric models to demonstrate their influence on pricing.
Preliminary findings indicate that increased user activity and improved targeting capabilities lead to higher advertising costs, underscoring the critical role of personal data in enhancing advertising efficiency. We provide practical quantitative results illustrating how different factors influence digital advertising prices.
In an inter-platform comparison, we find that for Google Display, longer user visits negatively affect advertising prices. This can be interpreted as longer sessions in search indicating deficiencies in search engine algorithm results. Conversely, Facebook is the only platform where an increase in the HHI index positively and significantly correlates with higher CPM advertising prices. This can be attributed to the more diverse data available to the social network, which enhances targeting capabilities for digital advertising.
The implications for antitrust regulations include the introduction of rules and the development of guidelines for the ethical use of data in advertising targeting to avoid user manipulation and ensure fair competition. Furthermore, obtaining disclosures from major platforms regarding the principles behind their algorithms—especially in relation to pricing and recommendations—would help advertisers better understand how decisions about ad placements are made.