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: Carbon Nanotubes Turn Electrical Current into Light-emitting Quasi-particles

Strong light-matter coupling in these semiconducting tubes may hold the key to electrically pumped lasers

Light-matter quasi-particles can be generated electrically in semiconducting carbon nanotubes. Material scientists and physicists from Heidelberg University...

Im Focus: Flexible proximity sensor creates smart surfaces

Fraunhofer IPA has developed a proximity sensor made from silicone and carbon nanotubes (CNT) which detects objects and determines their position. The materials and printing process used mean that the sensor is extremely flexible, economical and can be used for large surfaces. Industry and research partners can use and further develop this innovation straight away.

At first glance, the proximity sensor appears to be nothing special: a thin, elastic layer of silicone onto which black square surfaces are printed, but these...

Im Focus: 3-D scanning with water

3-D shape acquisition using water displacement as the shape sensor for the reconstruction of complex objects

A global team of computer scientists and engineers have developed an innovative technique that more completely reconstructs challenging 3D objects. An ancient...

Im Focus: Manipulating Electron Spins Without Loss of Information

Physicists have developed a new technique that uses electrical voltages to control the electron spin on a chip. The newly-developed method provides protection from spin decay, meaning that the contained information can be maintained and transmitted over comparatively large distances, as has been demonstrated by a team from the University of Basel’s Department of Physics and the Swiss Nanoscience Institute. The results have been published in Physical Review X.

For several years, researchers have been trying to use the spin of an electron to store and transmit information. The spin of each electron is always coupled...

Im Focus: The proton precisely weighted

What is the mass of a proton? Scientists from Germany and Japan successfully did an important step towards the most exact knowledge of this fundamental constant. By means of precision measurements on a single proton, they could improve the precision by a factor of three and also correct the existing value.

To determine the mass of a single proton still more accurate – a group of physicists led by Klaus Blaum and Sven Sturm of the Max Planck Institute for Nuclear...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Clash of Realities 2017: Registration now open. International Conference at TH Köln

26.07.2017 | Event News

Closing the Sustainability Circle: Protection of Food with Biobased Materials

21.07.2017 | Event News

»We are bringing Additive Manufacturing to SMEs«

19.07.2017 | Event News

 
Latest News

CCNY physicists master unexplored electron property

26.07.2017 | Physics and Astronomy

Molecular microscopy illuminates molecular motor motion

26.07.2017 | Life Sciences

Large-Mouthed Fish Was Top Predator After Mass Extinction

26.07.2017 | Earth Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>