Ad Clutter, Time Use, and Media Diversity

Abstract

We introduce advertising congestion along with a time use model of consumer choice among media. Both consumers and advertisers multihome. Higher equilibrium advertising levels ensue on less popular media platforms because platforms treat consumer attention as a common property resource: smaller platforms internalize less of the congestion from advertising and so advertise more. Platform entry raises the ad nuisance price to consumers and diminishes the quality of the consumption experience on all platforms. For consumer welfare this price effect of entry dominates the positive effect of more variety in some settings; thus, consumers will then be worse off after entry. (JEL D11, D43, L13, L82, M37)