Why Advertise on Short Video Platforms? Optimizing Online Advertising Using Advertisement Quality

Abstract

The emergence of short videos has provided a new way for advertisers to place online video advertisements. On short video platforms, the quality of advertisements is the main factor that attracts consumers. This study constructs a model based on advertisers’ advertising behavior and formulates their optimal advertising quality strategies. We then expand on the quality strategy by considering advertisers’ pricing factors. In addition, we compare advertisement placement on short video platforms and on general video platforms and analyze how advertisers should choose their advertisement placement strategies. Our research shows that advertisers should improve the quality of their advertisements to gain more profit when the platform is operating well, so that users become more willing to buy and products become more profitable. In addition, advertisers should present their advertisements in the shortest possible duration and show them after a longer program. Users’ price sensitivity negatively affects advertisers’ optimal advertising quality strategies and profits. Furthermore, advertisers’ choice of platform mainly depends on the advertising nuisance cost to users and the platform’s cost of entry. Finally, we find an optimal budget allocation scheme for small companies joining short video platforms to invest in bidding and designing advertisements.

Keywords

• short video platform
• advertising nuisance cost
• cost allocation
• advertising placement