The Effectiveness of Cross-Platform Targeted Advertising Strategy

This study examines the effectiveness of cross-platform targeted advertising (CPTA), referring to the phenomenon that a platform (the advertiser) cooperates with another platform (the host) to retarget consumers through targeted advertising. Using a game-theoretic framework, we find that, first, the advertiser optimally sets a medium precision for its advertising, because an excessively high precision would discourage the cooperation between the advertiser and the host. Second, the moderate targeting precision motivates the advertiser to adopt CPTA. Third, when the precision level is relatively low, CPTA may make the host better off at the expense of the advertiser, in which case the advertiser would like to advertise by itself. Fourth, CPTA is always good to the host as well as the seller participating in the advertiser’s platform. Finally, there exists a Pareto zone wherein the advertiser, the host and the seller can formulate a win–win–win situation under CPTA.