The Demand Effects of Joint Product Advertising in Online Videos & Strategic Analysis of the Agency Model for Digital Goods
Mr. Yinliang TAN
PhD Candidate in Operations Management
Department of Information Systems & Operations Management
Warrington College of Business Administration
University of Florida
Main paper (Title and Abstract):
The Demand Effects of Joint Product Advertising in Online Videos
Joint product display in videos may help customers to not only evaluate the attributes of products that can influence their individual demands (direct effect) but also learn about the complementarity between them that may cause additional correlation in their demands (spillover effect). To estimate the demand effects, we introduced videos displaying apparel with matching accessories for few randomly selected apparel on a fashion retailer’s website. We found that introducing a video resulted in a 14.5 percent increase in apparel sales and a 28.3 percent increase in accessories sales. The estimated increase in accessories sales was largely attributed to the spillover effect of videos. Moreover, introducing videos with other product promotions resulted in a significantly higher effect of videos on product demands. Overall, we show how video display of related products can increase their demands in an online product network.
Second paper (Title and Abstract):
Strategic Analysis of the Agency Model for Digital Goods
In this study, we investigate the strategic impact of the agency model in comparison with the prevalent wholesale and fixed price models by formulating a dual channel model of distribution accommodating sales of both traditional and digital goods. In contrast to the current press concerning the DOJ’s lawsuit, we find that the equilibrium price of digital goods is lower in the agency model than in the conventional wholesale model. Furthermore, the agency model can increase firm’s profit as well as consumer surplus by mitigating the double marginalization effect within the digital goods supply chain.