Blessing or Curse? Implications of Data Brokers for Publisher Competition

The explosion of consumer data has spawned a burgeoning data broker industry, pivotal in targeted advertising. A recent media report estimates the worth of the data broker industry by 2030 at approximately $382 billion. Key players such as Oracle and Lotame gather data from diverse sources to create and sell valuable insights. Digital publishers often rely on these brokers to gain (i) individual insights drawn from their own data or (ii) collective insights drawn from both their data and those of their competitors, improving their targeting precision. This study develops an analytical model to explore the competitive implications of data brokers in a targeted advertising market with two competing publishers and a mass of advertisers. It reveals that the data broker might strategically price their insights to exclusively offer collective insights to one publisher, thereby altering market competition. Moreover, the broker’s actions can either foster or hinder competition among publishers, depending on its strategic interests. Despite potentially reducing market competition through exclusive selling, the provision of collective insights can enhance aggregate welfare by enhancing publishers’ targeting capability. This illustrates the nuanced interplay between data brokers, publishers, and advertisers in shaping the landscape of targeted advertising.

• 저널Information Systems Research · 36(1) · 261–284
• 토픽Digital Platforms and Economics · Strategy and Management
• DOI10.1287/isre.2022.0227
• 저자Xin Zhang, Wei Thoo Yue, Ran Zhang, Yugang Yu