The TV Advertising Market : Demographic Segmentation and the Impact of Viewership Decline

Viewership of traditional television has decreased in the past decade, particularly among younger viewers. This paper studies the impact of this decline on the U.S. TV advertising industry using a two-sided model that explicitly considers viewers’ demographics. The model incorporates viewers, who choose which channel to watch; advertisers, who choose how many advertising views to purchase in each demographic group; and channels, who choose how many advertisements to show during their programs. I use the model to evaluate how viewership declines affect demographic-specific prices per ad view, advertisers from different industries, TV channels, and viewers. I additionally analyze how accounting for demographic segmentation could affect theevaluation of mergers between TV conglomerates