Brown Bag Seminar Industrial Economics

This paper studies the role of viewers’ heterogeneous ad aversion on media content demand and advertisers’ willingness to pay. High-frequency individual-level data on broadcast media content allows us to track viewers’ minute-by-minute choices within the set of available alternatives. We first illustrate the potential selection biases that arise when using aggregated market-level data to estimate viewers’ content demand and ad elasticity. We find that ad elasticity varies considerably by content; however this may be due to heterogeneous individuals self-selecting into particular content. To prevent self-selection issues, we estimate ad aversion using individual choices. We exploit minute-level data on individual decisions to estimate viewers’ heterogeneous ad aversion adapting to media content the demand model in Dubois et al. (2020). With this approach, we prioritize estimating heterogeneous preferences without placing distributional assumptions on individuals’ ad aversion or on how it correlates with observable demographic characteristics. We find that ad aversion is highly heterogeneous and not strongly correlated with observable socioeconomic characteristics such as economic status or gender. We are also able to disentangle ad aversion from idiosyncratic inertia/state dependence and demographic-cohort content preferences. For the advertisers’ side of the market, our findings indicate that advertisers’ willingness to pay per impression is positively associated with the content’s ability to reach audiences with high (estimated) ad aversion. We find robust evidence of a per-impression price premium for ad slots that are able to target individuals with higher levels of ad aversion.

(with Sully Calderón, Aida Moreu, and Paul Richter)