Obvious Versus Subliminal Advertising for Digital Content Creators

ABSTRACT

Content monetization on digital platforms, such as YouTube and TikTok, primarily relies on advertising and video views. Content creators typically employ two advertising strategies: obvious advertising and subliminal advertising. The former is a traditional and easily recognizable advertisement, whereas the latter is subtly integrated into the video content, and thus less perceptible to viewers. This study develops a game‐theoretical model in which creators strategically choose advertising strategies and the amount of advertising, while user viewing behavior is affected by both advertising and content quality. We examine the impact of market factors (such as the user satiation rates, creators' unit advertising revenue, and the cost of producing subliminal advertising) on video content creation and explore the ensuing implications for creator payoff and user surplus. Our analysis yields several novel insights. First, contrary to the conventional view that excessive advertising is primarily associated with low‐quality content, we find that high‐quality videos may also carry substantial advertising. Moreover, creators may reduce the amount of advertising even when higher unit advertising revenue is attainable, reflecting a strategic trade‐off between advertising and overall monetization. Second, subliminal advertising has a dual effect on content creation. While its heightened concealment may encourage creators to produce more high‐quality videos, it can also redirect effort toward advertising design rather than content improvement. Third, under certain conditions, higher unit advertising revenue benefits both the creator payoff and user surplus, indicating that profitability and user welfare are not necessarily in conflict. Finally, when the cost of designing subliminal advertising is moderate, competition among creators leads to excessive subliminal advertising and reduces creator payoff, consistent with the Tragedy of the Commons. In this case, obvious advertising dominates; otherwise, subliminal advertising is preferred. These insights offer actionable guidance for creators in choosing advertising strategies and determining the amount of advertising to balance monetization incentives and user experience on digital platforms.