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Measuring the Effectiveness of Online Advertising Strategies

Online advertisements that are both targeted and highly visible can have the counterproductive effect of turning off viewers by seeming too intrusive and not being sensitive to consumers’ privacy.

(originally published by Booz & Company)

Online Display Advertising: Targeting and Obtrusiveness (PDF)

Avi Goldfarb (University of Toronto) and Catherine Tucker (Massachusetts Institute of Technology)

Marketing Science, forthcoming

Date Published: 
February 2010 (online version)  

The US$11.2 billion online advertising market has become much more sophisticated since the primitive days of simple banner ads. Today advertisers can snare viewers with snazzy graphics, Flash animation, and video ads that are virtually impossible to ignore. Others take a more muted, yet targeted approach using contextually relevant ads, such as placing text ads for computers on a technology site. Google’s AdSense division brings in about $6 billion in annual revenues through its targeted text ads, which Google claims have been seen by an estimated 76 percent of Internet users in the United States. But what are the most effective ways to advertise online? The authors found that two strategies — flashy, even obtrusive Internet interruptions and more staid but targeted text ads — are effective on their own, but, surprisingly, that combining these two approaches was a bad idea. This dual-barreled technique turned Web surfers off, led to negative product associations, and decreased consumers’ intention to buy the product.

The researchers looked at almost 3,000 Web advertising campaigns across a wide range of products — from apparel to entertainment to home improvement. They used data from a large collection of Internet surveys (an average of 852 survey respondents per campaign) that examined the effectiveness of different marketing tactics. This allowed the authors to compare targeted ads that matched products to website content with so-called obtrusive ones that featured video, pop-ups, or ads taking over the whole page. The study found that high-visibility ads — videos, pop-ups, and the like — were more memorable to consumers but content-linked targeted marketing lured higher numbers of consumers into saying they would actually buy the product or service. By blending the two strategies, advertisers achieved high visibility and consumer recall, but individuals complained in the surveys that they felt the companies were being too aggressive and felt as if their privacy had been invaded. This sentiment was especially pronounced in responses to ads from firms in the financial sector, where confidentiality concerns are paramount.

Given that an estimated $664 million is currently spent on ads that are both targeted and obtrusive, the authors warn that advertisers would do well to abandon this strategy for a simpler approach. The researchers calculate that by doing this, marketers could cut ad spending by more than 5 percent without affecting sales. One of the reasons for Google AdSense’s continued success, the study argues, is that its unobtrusive text-based ads are integrated seamlessly with Web content. In other words, a subtle approach might be the best way for companies to show customers that their privacy matters. 

Bottom Line:
Online ads should either be integrated with website content or consist of attention-grabbing technology. Combining the two approaches can turn consumers off to the product altogether.

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