Information search, behavioural economics, and relevance decisions in the online media industry: how strongly do the algorithms of intermediaries influence the relevance evaluation of information?

ABSTRACT

The study compares several information services offered by Internet intermediaries. The hypotheses deal with the influence of a gatekeeper’s relevance assessment service on a consumer’s decision-making. The empirical findings provide a taxonomy of decisive attribute levels and their part-worth utilities which affect consumers’ decisions. From this, media management recommendations can be derived. Some findings may be worrying for media management. For example, search engines will increase the competitive pressure on journalistic media the better they provide personalised search results. However, the results also indicate that users’ search behaviours open up a large field for media companies’ brand-driven distribution strategies. This is possible because almost half of search engines’ search queries are by brand name or media label. The weakness of media companies is revealed above all in the field of advertising. Nonetheless, media companies are still highly competitive due to their journalistic potential. In view of the research results, media industries should modify their business models in such a way that they integrate more of the superior characteristics, compared with the algorithms of well-known Internet intermediaries, into their editorial journalistic work.

KEYWORDS:

• Information search
• information economics
• behavioural economics
• relevance assessment
• algorithms
• internet intermediaries
• media management

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1. A large number of specific single studies show that such services have informative as well as distributive functions; see as examples: Wirth et al. (2007); Rangaswamy et al. (2009); Ahrens (2011); Goldenberg et al. (2012); Lis and Horst (2013); Liu et al. (2014); Ricci et al. (2015); Schmidt (2016); Solsman (2018); Gómez and Quevedo (2018). However, a study covering the entire online information services market is not yet available. This study may also provide initial findings.

2. For similar findings, see Mitchell and Page (2014, p. 5); eMarketer (2019, p. 5); see also overviews about online traffic, e.g. SimilarWeb/similarweb.com.

3. For example, although Germany’s print advertising has steadily, and sometimes dramatically, declined since 1999 and television and radio advertising has tended to stagnate, the online advertising expenditure is steadily increasing. For the first time in 2017, TV advertising came second behind online ads. However, two-thirds of online advertising expenditure is turnover from search word marketing (Source: The German Advertising Federation [ZAW]; German Circle of Online Marketers [OVK]).

4. In J.T. Du and Spink (2008), J. T. Du & Spink (2011)); Mitchell and Page (2014); Schmidt et al. (2017, pp. 21–22); Newman (2018).

5. For example, “heuristic cues”, Kahneman (2011); Chen and Chaiken (1999); “mental shortcuts”, Solomon (2018, p. 354); Kotler and Keller (2016, p. 98).

6. Solomon (2018, pp. 357–367); Kotler and Keller (2016, pp. 199–203); Lerman et al. (2016); see also the theory of planned behaviour, e.g. Papies et al. (2011).

7. Fifty-nine per cent of Germans state “I completely/generally trust” computer or software specialists, and only 36% rate journalists in the same way (Verein, 2016, p. 30). Other European countries show a similar ranking.

8. For more details, see Sawtooth Software Lighthouse Studio: ACBC, https://www.sawtoothsoftware.com/products/conjoint-choice-analysis/acbc.

9. Market segments: Cluster analysis of individual part-worth utilities (CCEA – Convergent Cluster & Ensemble Analysis, reproducibility of the result = 95%).

10. For similar results, see Newman et al. (2015, p. 76).

Additional information

Funding

This work was supported by the Hamburg University of Applied Sciences (HAW Hamburg), Faculty of Design, Media and Information, Department of Information.

Notes on contributors

Hardy Gundlach

Hardy Gundlach is professor of media and information economics at the University of Applied Sciences Hamburg (Faculty Design, Information and Media) in Germany. He was a consultant to the commission on Concentration in the Media (KEK) in 2006. His research focuses on media economics and management, Internet and digital economics, public management, competition policy, industrial economics, and regulation and deregulation

Ulrich Hofmann

Ulrich Hofmann (em) teaches as professor of information management at the University of Applied Sciences Hamburg (Faculty Design, Information and Media) in Germany, was Visiting Professor at the University Wisconsin at Milwaukee (USA), Visiting Lecturer University Lund (Sweden), Campus Helsingborg, Co-founder of Baltic Virtual Campus (BSVC), carried out studies in management in the USA (Marshall Fund), at an early stage has written monographs (Global Information Economy, Network Economics) about the informational importance of the Internet, is a shareholder of Gundlach & Hofmann Media Choices and Metrics UG (limited liability).