Anthony Dukes

​​​​The skippable ad format, commonly used by online content platforms, requires viewers to see a portion of an advertiser's message before having the option to skip directly to the intended content and avoid viewing the entire ad. Under what conditions do viewers forego this option and what are its implications for advertisers and the platform? We develop a dynamic model of a viewer receiving incremental information from the advertiser. This model identifies conditions under which the viewer (i) skips the ad or (ii) engages with the advertiser. Our model incorporates the advertising market and assess implications of skippable ads on the platform's profit and advertisers' surplus. Relative to the traditional ad format, we find that there are unambiguously more advertisements and viewers on the platform with skippable ads. Under reasonable conditions, the
skippable ad format is a strict Pareto improvement, which raises the surplus of dvertisers and the profit of the platform. The source of the additional surplus is that skippable ads allow the viewers to use private information about the advertiser to make more efficient decisions about their ad viewing choices.