Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

O.R. study faults reliance on click-through rates to assess banner ads

01.07.2002


Viewing of internet ads does lead to future sales

Contrary to popular e-wisdom, measuring Internet banner ads only by the number of times that viewers click through is faulty, according to a paper presented today at a conference of the Institute for Operations Research and the Management Sciences (INFORMS®).

The paper contends that the more often consumers see online banner ads, the more likely they are to make a purchase, even if they don’t click through immediately to the advertiser’s internet storefront. The evidence also suggests that banner advertising may be a useful tactic for managing relationships with repeat-customers.



"We are finding strong evidence of exposure effects," explains the University of Chicago’s Jean-Pierre Dubé, one of the authors. "In other words, even if a consumer does not click through on the banner, they still see it and, thus, there is an impression.

"For existing repeat-consumers, we find the time between visits to a site and purchasing to be affected by the accumulated impressions, even if there is no direct click-through. We also find that accumulated impressions increase the total expenditure at the time of purchase. Moreover, these impressions have lasting effects on consumers. Interestingly, we also find that inter-purchase times are lower if consumers are exposed to the firm’s advertising on many different websites."

The research adds to the controversy over the rewards of advertising on the Internet. Companies concerned about the value of advertising online have sought more concrete ways of determining the ability of online ads to spur sales. Although click-through rates don’t measure actual purchases, they have been viewed as a useful indicator of customer interest. The new study brings the discussion back to the question of whether latent effects of online advertising are significant and measurable.

The paper, "The Effects of Banner Advertising on Consumer Inter-Purchase Times and Expenditures in Digital Environments," is by Dr. Dubé, Puneet Manchanda, Khim Yong Goh, and Pradeep K. Chintagunta of the University of Chicago Graduate School of Business. It is being delivered today at the 2002 Marketing Science Conference, sponsored by the INFORMS College on Marketing. The conference is running from June 27-30 at the University of Alberta.

Data

The data come from an anonymous Internet-only firm engaged in selling healthcare and beauty products, as well as non-prescription drugs, to consumers. The data span a period of three months during the third quarter of 2000. The data are available at the individual cookie level. The data are unique in that they survey individual-level stimulus (advertising) and response (purchase amount).

The data are contained in three databases. One database comprises the on-line advertisement banner exposure and click-through response originating from promotional campaigns that were run on websites such as Yahoo!, AOL, Women.com, iVillage.com, Healthcentral.com, and E*Trade. A second database contains the date and time of the purchase transaction for each unique cookie identifier. The third database consist of the total dollar value of the transaction and a key that links these values with the cookie identifier in the first database.

Analyzing online repeat customers

The paper focuses on repeat visit and purchase behavior of consumers at a website. Among the authors’ findings are:

• Click-through is a poor measure of advertising effectiveness because it accounts for a very small proportion of overall purchases.

• Examining the effects of advertising on consumers, the authors find that the time since last exposure and the number of creatives have a much larger effect on purchase timing relative to the number of exposures.

This result has implications for advertising copy and ad timing. In terms of copy, the authors conclude that exposing the same consumer to several unrelated creatives may be less beneficial than a single creative.

In terms of timing, they speculate that it may be more beneficial to expose consumers to a series of evenly spaced ads relative to massed exposures. Since there is a strong same-day purchase effect given exposure, the authors suggest that advertisers use banner ads to smooth out sales and run special promotions.

• Findings about when shoppers make an online purchase imply that managers should ensure that once consumers reach the site their shopping baskets are as large as possible in dollar terms. Thus, the authors suggest, for example, following the lead of Internet marketers who offer "point of checkout" promotions to increase basket expenditures.

• There is a strong positive benefit of exposing customers to the same ad across many websites.

The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with over 10,000 members dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, the stock market, and telecommunications. 2002 is the 50th anniversary of organized operations research in the United States. 1952 was the year that the journal Operations Research and the Operations Research Society of America, one of the founding societies of INFORMS, were born. The INFORMS website is at http://www.informs.org.

Barry List | EurekAlert!
Further information:
http://www.informs.org
http://www.informs.org/Press/banneradabstract.pdf

More articles from Communications Media:

nachricht New Technologies for A/V Analysis and Search
13.04.2017 | Fraunhofer-Institut für Digitale Medientechnologie IDMT

nachricht On patrol in social networks
25.01.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Communications Media >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: New proton record: Researchers measure magnetic moment with greatest possible precision

High-precision measurement of the g-factor eleven times more precise than before / Results indicate a strong similarity between protons and antiprotons

The magnetic moment of an individual proton is inconceivably small, but can still be quantified. The basis for undertaking this measurement was laid over ten...

Im Focus: Frictional Heat Powers Hydrothermal Activity on Enceladus

Computer simulation shows how the icy moon heats water in a porous rock core

Heat from the friction of rocks caused by tidal forces could be the “engine” for the hydrothermal activity on Saturn's moon Enceladus. This presupposes that...

Im Focus: Nanoparticles help with malaria diagnosis – new rapid test in development

The WHO reports an estimated 429,000 malaria deaths each year. The disease mostly affects tropical and subtropical regions and in particular the African continent. The Fraunhofer Institute for Silicate Research ISC teamed up with the Fraunhofer Institute for Molecular Biology and Applied Ecology IME and the Institute of Tropical Medicine at the University of Tübingen for a new test method to detect malaria parasites in blood. The idea of the research project “NanoFRET” is to develop a highly sensitive and reliable rapid diagnostic test so that patient treatment can begin as early as possible.

Malaria is caused by parasites transmitted by mosquito bite. The most dangerous form of malaria is malaria tropica. Left untreated, it is fatal in most cases....

Im Focus: A “cosmic snake” reveals the structure of remote galaxies

The formation of stars in distant galaxies is still largely unexplored. For the first time, astron-omers at the University of Geneva have now been able to closely observe a star system six billion light-years away. In doing so, they are confirming earlier simulations made by the University of Zurich. One special effect is made possible by the multiple reflections of images that run through the cosmos like a snake.

Today, astronomers have a pretty accurate idea of how stars were formed in the recent cosmic past. But do these laws also apply to older galaxies? For around a...

Im Focus: Visual intelligence is not the same as IQ

Just because someone is smart and well-motivated doesn't mean he or she can learn the visual skills needed to excel at tasks like matching fingerprints, interpreting medical X-rays, keeping track of aircraft on radar displays or forensic face matching.

That is the implication of a new study which shows for the first time that there is a broad range of differences in people's visual ability and that these...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Ecology Across Borders: International conference brings together 1,500 ecologists

15.11.2017 | Event News

Road into laboratory: Users discuss biaxial fatigue-testing for car and truck wheel

15.11.2017 | Event News

#Berlin5GWeek: The right network for Industry 4.0

30.10.2017 | Event News

 
Latest News

IceCube experiment finds Earth can block high-energy particles from nuclear reactions

24.11.2017 | Physics and Astronomy

A 'half-hearted' solution to one-sided heart failure

24.11.2017 | Health and Medicine

Heidelberg Researchers Study Unique Underwater Stalactites

24.11.2017 | Earth Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>