Ad Intensity Policies and Content Provision on Revenue-Sharing Content Platforms

Online content platforms monetize user engagement through advertising and share ad revenue with content creators to incentivize content provision. A central design decision for these platforms is the choice of ad intensity policy, which governs how advertising load is determined and shapes creator incentives, content quality, consumer consumption behaviors, and platform profitability. The authors analyze a model with one platform and two competing content creators to study three ad intensity policies: differentiated advertising (DA), uniform advertising (UA), and creator-set advertising. With symmetric creators and quality-independent marginal ad revenue, UA intensifies quality-based competition among creators and leads to higher revenue-sharing rate, content quality, advertising intensity, and platform profit than DA. Creators benefit more from UA than from DA when creator substitutability is low, but may prefer DA when substitutability is high. Compared with DA, creator-set advertising weakens incentives for content investment, resulting in lower content quality, lower ad intensity, and reduced platform profit; its effects on creators and consumers depend on the degree of creator substitutability. Extensions show that relaxing the benchmark assumptions—such as allowing for creator asymmetry or quality-dependent marginal ad revenue—can overturn UA's advantage and make DA more profitable, highlighting that no single ad intensity policy is universally optimal.