Sichtbarkeit in digitalen Märkten: Messung von Risiken und ökonomische Konsequenzen
Zusammenfassung der Projektergebnisse
The rise of digital markets presented firms with unprecedented opportunities to engage with customers and promote their products. A key element to a firm’s success in these markets is its visibility – i.e., the extent to which potential customers are able to find the firm online – such that a visibility loss can have severe economic consequences for the firm and its investors. Despite the increasing attention that non-financial risks have gained in Enterprise Risk Management (ERM), the risk and economic consequences of a visibility loss in digital markets remain largely overlooked. This research project aimed to close this gap by developing a framework to quantify the visibility of a firm in digital markets, the risk of a visibility loss and the economic consequences of a visibility loss. We proposed to apply and validate the developed framework in two important empirical settings: search engines and online marketplaces. With three individual project modules, we strived for a better integration of risk management and marketing by: (i) introducing innovative methods to measure the risk associated with visibility losses in digital markets; (ii) providing a measure of the economic impact of the risk for the firm and its investors; and (iii) providing examples of how firms can communicate this risk to their stakeholders. Among others, the project found in an empirical study of 965 firms over 12 years that half of them face a 5% probability of losing more than 23% of their visibility within a month. The potential losses rise to 51% and 63% at six- and twelve-month intervals, respectively. Governmental institutions, platforms, and marketplaces enjoy the lowest risk; technology, electronics, and entertainment firms suffer the highest risk of visibility losses. On average, a 10% visibility loss leads to a 2% loss of organic search traffic in the same week. Using a panel of 202 business-to-consumer firms from the S&P 500 constituents with weekly observations over 8,5 years (2011-2019), we show that firms with higher visibility consistently yield higher stock returns to their investors. On average, a 1% increase in a firm’s visibility in organic search results is associated with 1% higher annualized returns. Furthermore, investors can earn 2.6% annualized returns with a trading strategy that consists of buying the stocks of high-visibility firms and short-selling the stocks of low-visibility firms. These effects also hold after controlling for finance fundamentals, common risk factors, industry-wide, market-wide shocks, and for the possible endogeneity of visibility. For the average firm in the sample, 1% higher visibility in organic search results represents additional annual returns of $528.8 million to shareholders. However, investing in high-visibility firms is also riskier, as these firms have higher exposure to both idiosyncratic and systematic equity risk. Finally, in our studies examining Amazon’s search engine recommendations on the Amazon marketplace for more than a million daily observations from three countries, we find no consistent evidence of unfair competition through search engine recommendations and the resulting visibility on the marketplace. We propose applying our suggested five-step approach in other settings to ensure compliance with new regulations governing fair competition on digital platforms, such as the Digital Markets Act in the European Union or the proposed American Innovation and Choice Online Act in the United States.
Projektbezogene Publikationen (Auswahl)
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“The Google Effect: Linking a Firm’s Organic Search Visibility to its Stock Market Performance”, 2020 Marketing Strategy Consortium, University of Texas at Austin, USA (Zoom)
Gabriela Alves Werb
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“Measuring Fair Competition on Digital Platforms,“ 17th Symposium on Statistical Challenges in Electronic Commerce Research (online)
Lukas Jürgensmeier
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Measuring Fair Competition on Digital Platforms,” WISE 2022 — Workshop on Information Systems in Economics (Copenhagen Business School, Copenhagen, Denmark)
Lukas Jürgensmeier
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“Measuring Fair Competition on Digital Platforms,“ 13th Paris Conference on Digital Economics 2022 (Télécom Paris, Paliseau, France)
Lukas Jürgensmeier
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“Measuring Fair Competition on Digital Platforms,“ EMAC Annual Conference 2022 (Corvinus University, Budapest, Hungary)
Lukas Jürgensmeier
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“Measuring Fair Competition on Digital Platforms,“ EMAC Doctoral Colloquium 2022 (Corvinus University, Budapest, Hungary)
Lukas Jürgensmeier
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“Measuring Fair Competition on Digital Platforms,” 20th ZEW Conference on the Economics of Information and Communication Technologies (ZEW — Leibniz Centre for European Economic Research, Mannheim, Germany)
Lukas Jürgensmeier
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“Measuring Fair Competition on Digital Platforms,” ISMS Marketing Science Conference 2022 (online)
Lukas Jürgensmeier
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“Measuring Fair Competition on Digital Platforms,” SALTY 2022 — Quantitative Marketing Conference (WHU — Otto Beisheim School of Management, Düsseldorf, Germany)
Lukas Jürgensmeier
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“Measuring Fair Competition on Digital Platforms,” Working Paper, currently under revision for third-round review at Journal of Marketing.
Jürgensmeier, Lukas & Skiera, Bernd
