Visibility in Digital Markets: Measuring Risks and Economic Consequences

• Applicant: Professor Dr. Bernd Skiera
• Subject Area: Accounting and Finance
• Term: from 2020 to 2023
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 443600374

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. To close this gap, this research project aims to develop 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 propose to apply and validate the developed framework in two important empirical settings: search engines and online marketplaces. With three individual project modules, we strive 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.

• DFG Programme: Research Grants