Chiara Brambilla – University of Padova, Italy
Native advertising is a marketing tool that aims to mimic the regular content of the platform on which it appears. Due to this striking resemblance, native advertising may be very effective, but it may also negatively influence the perceived credibility of the media on which it is placed. In our model, we consider a firm that invests in traditional and native advertising on a high-quality content communication platform which has to consider the trade-off between the profit gained by publishing native advertising and the consequent loss of credibility. We formalise the problem as a Stackelberg infinite-time horizon differential game where the media outlet is the leader. We compute a time-consistent open-loop equilibrium and obtain conditions under which it is optimal for the media to accept native advertising.
(with Alessandra Buratto and Luca Grosset)