From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising

This paper analyzes the impact of intermediary concentration on allocation revenue in online platforms. We study sponsored search documenting how advertisers increasingly bid through a handful specialized intermediaries. enhances automated bidding and data pooling, but lessens competition whenever represents competing advertisers. Using nearly 40 million Google keyword auctions, we first apply machine learning algorithms to cluster keywords into thematic groups serving as relevant markets. an instrumental variable strategy, estimate decline platform’s approximately 11 percent due average rise associated with merger acquisition activity. (JEL C45, D44, G34, L13, L81, M37)