Inefficiencies in Digital Advertising Markets

TL;DR

This paper examines four key inefficiencies in digital advertising markets—measurement issues, channel frictions, ad blocking, and ad fraud—highlighting their unique digital manifestations and summarizing current research and future directions.

Contribution

It provides a comprehensive overview of four poorly understood inefficiencies in digital advertising, integrating academic insights and practical developments.

Findings

Identification of measurement challenges in digital ad effectiveness

Analysis of frictions among digital ad market participants

Discussion of emerging issues like ad blocking and fraud

Abstract

Digital advertising markets are growing and attracting increased scrutiny. This paper explores four market inefficiencies that remain poorly understood: ad effect measurement, frictions between and within advertising channel members, ad blocking and ad fraud. These topics are not unique to digital advertising, but each manifests in new ways in markets for digital ads. We identify relevant findings in the academic literature, recent developments in practice, and promising topics for future research.