Abstract: Video platforms usually provide consumers with free video services but generate revenue from advertisers. An increasing number of video platforms pursue a skippable advertising mode, which allows consumers to skip advertisements after only a few seconds and directly access the content they are looking for. YouTube, a popular video platform, has had significant success with the skippable advertising mode. It is reported that skippable advertisements account for more than 85% of YouTube advertisements. Skippable advertisements benefit agents on both sides of the video platforms. For one thing, viewers can skip irrelevant advertisements and avoid the delay of content. For another, skippable advertisements help advertisers filter non-target audiences since non-target audiences certainly choose to skip advertisements for videos; That is to say, advertisers only need to pay for effective watching.
Different from skippable advertisements, traditional non-skippable advertisements force consumers to view all advertisements even though consumers are not interested in some advertisements at all, such that advertisers need to pay for the ineffective watching, that is to say, it may incur a high cost to promote their products or services. Unfortunately, small and micro enterprises cannot afford expensive advertisements. Furthermore, small and micro enterprises typically have a small target consumer size and they may be unwilling to pay for the ineffective exposure of their products. Therefore, skippable advertisements seem to attract more consumers and advertisers. It is reported that small and micro enterprises are becoming a new force in supporting the online advertising market. However, non-skippable advertisements guarantee profit for video platforms through forced advertisement viewing. For video platforms, there is a trade-off between attracting more agents on two sides and losing advertising exposure. Thus, a question naturally arises, which advertising mode is more profitable for video platforms?
Skippable advertisements have attracted considerable attention. Most of the existing research focuses on empirical studies about factors that affect consumers’ advertisement-skipping behaviors. To complement existing studies, this work focuses on video platforms’ advertising mode choice. Specially, we seek to deal with the following questions: (1)What is the video platform’s optimal pricing strategy under different advertising modes? (2)What is the video platform’s choice of advertising mode? (3)What are the impacts of advertising modes on advertisers?
To answer these questions, game theory, sensitive analysis, and numerical studies are used herein. We build a game model involving a monopoly video platform, heterogeneous advertisers, and consumers to explore the advertising mode choice. We consider two types of advertisers, type L and type H, where type L possesses a smaller target consumer size whereas type H possesses a broader target consumer size. Each type has an incentive to make efforts to increase advertisement quality and decrease consumers’ aversion to advertisements. In the non-skippable mode, consumers have to watch the advertisements before watching the content on the platform. In the skippable mode, consumers can skip irrelevant advertisements. Moreover, even for relevant advertisements, consumers can jump directly to their desired content if they are not interested in some advertisements. The sequence of events is as follows. In the first stage, the video platform chooses an advertising mode and sets the price for advertisements. In the second stage, two types of advertisers decide whether to join the platform to place advertisements and decide how much effort to make to increase the attractiveness of their advertisements.
The results show that in the non-skippable mode, when the target consumer size is higher than the threshold, advertisers choose to join the platform. Additionally, type L advertisers face a higher bar when placing advertisements. As for the pricing strategy, the platform will set a low price to allow all advertisers to enter the market if all advertisers possess a relatively large target consumer size. However, if type L advertisers’ target consumer size is very small, the platform will set a high price so that only type H advertisers can place advertisements. By contrast, in the skippable mode, the video platform will increase the price of advertisements to make up for the decrease in advertisement exposure. It should be noted that, even with a high price, the entry barriers for advertisers are falling. In addition, type L advertisers prefer skippable mode because it avoids paying for ineffective advertising. On the contrary, type H advertisers prefer the non-skippable mode as it decreases advertisement prices. Concerning the platform’s choice of advertising mode, it depends on the advertiser structure. It is possible to cover the market and earn more in the skippable mode if the percentage of type L advertisers is high. If the proportion of type L advertisers is moderate, the video platform also prefers skippable mode when all advertisers possess a relatively high target consumer size.

Key words: video platforms, advertising mode, target consumer, effort level

摘要： 考虑广告商目标受众数量的差异性,构建由网络视频运营商、两种类型的广告商组成的博弈模型,研究网络视频运营商的广告模式选择及其对广告商进入的影响。研究表明,不可跳过式广告模式下,广告商加入平台的门槛不同,目标受众较少的广告商进入平台面临较高的门槛;而可跳过式广告模式下,广告商加入平台的门槛相同,且尽管平台制定了较高的广告费,但广告商进入平台的门槛降低。在广告模式选择方面,当市场上存在大量目标受众较少的广告商时,或广告商的目标受众普遍较多且目标受众相对较少的广告商的数量处于中间水平时,可跳过式广告模式是网络视频运营商的最优选择;否则,不可跳过式广告模式占优。

关键词: 网络视频运营商, 广告模式, 目标受众, 努力水平