| Abstract: |
Online “retail media” refers to ads served to consumers on retailers’ websites. From being essentially non-existent a decade ago, this market is projected to grow to $100 billion by 2026 in the US, which would be more than 20% of all US ad spend. Retail media has important implications for advertisers (who are typically third-party sellers or brands), retailers and consumers.
In this talk, I will focus on the attached paper, in which we use a game theory model to investigate a retailer’s offering of retail media and manufacturers’ responses as manifested in their advertising and distribution strategies. The manufacturers who sell through the retailer use the retailer’s first-party customer data and their own knowledge of which type of customers their products best match with to bid in auctions run by the retailer to place ads (called “endemic ads”). These ads increase the efficiency of matching customers and products, and the retailer relies on advertising as a significant source of profit in comparison to revenue share. However, bidding competition among manufacturers in ad auctions erodes their profits on top of sharing revenue with the retailer, and offering retail media could drive manufacturers away from selling through the retailer to other options such as direct selling. Consequently, a mid-sized retailer may forego retail media even if it is costless to implement. We also study why, and under which conditions, a retailer may allow manufacturers who do not sell on its platform to still place ads on the retailer’s platform (called “non-endemic ads”).
I will also briefly discuss two other related papers that study implications of retail media: one that primarily focuses on implications for retailers’ revenue models, and one that focuses on how consumer response to retail media ads.
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Biography:
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Kinshuk Jerath is the Arthur F. Burns Chair of Free and Competitive Enterprise, Professor of Business in the Marketing Division at Columbia Business School. He is also the Chair of the Marketing Division. His research is in technology-enabled marketing, primarily in online advertising, online and offline retailing, sales force management and customer management. His research has appeared in top-tier marketing and operations management journals, such as Marketing Science, Journal of Marketing Research, Management Science and Operations Research. He is an Associate Editor at Journal of Marketing Research, Management Science, Quantitative Marketing and Economics, and Journal of Retailing, a Senior Editor at Production and Operations Management, and serves on the editorial boards of several other top-tier journals including Marketing Science. He has been nominated by the Marketing Science Institute (MSI) as a Young Scholar in 2013 and as a Scholar in 2018, and has received research award grants from Amazon, Google, Adobe and other companies and institutes, including MSI. At Columbia Business School, Professor Jerath teaches courses on Digital Marketing, Frontiers of Retailing and Customer Management. He has consulted for Fortune 500 companies, has served as an expert in several high-profile legal cases, and sits on the advisory boards of multiple startups. He received a B.Tech. degree in Computer Science and Engineering from the Indian Institute of Technology Bombay and a Ph.D. degree in Operations and Information Management from the Wharton School of the University of Pennsylvania. Prior to being at Columbia, he was on the faculty of the Tepper School of Business at Carnegie Mellon University.
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