Differentiation of online text-based advertising and the effect on users' click behavior

Online syndicated text-based advertising is ubiquitous on news sites, blogs, personal websites, and on search result pages. Until recently, a common distinguishing feature of these text-based advertisements has been their background color. Following intervention by the Federal Trade Commission (FTC), the format of these advertisements has undergone a subtle change in their design and presentation. Using three empirical experiments, we investigate the effect of industry-standard advertising practices on click rates, and demonstrate changes in user behavior when this familiar differentiator is modified. Using three large-scale experiments (N1 = 101, N2 = 84, N3 = 176) we find that displaying advertisement and content results with a differentiated background results in significantly lower click rates. Our results demonstrate the strong link between background color differentiation and advertising, and reveal how alternative differentiation techniques influence user behavior.This work was supported by a studentship from the Engineering and Physical Sciences Research Council.This is the final published version. It first appeared at http://www.sciencedirect.com/science/article/pii/S0747563215003180#. Additional data related to this publication is available at the University of Cambridge data repository: http://www.repository.cam.ac.uk/handle/1810/247391

Inefficiencies in Digital Advertising Markets

Digital advertising markets are growing and attracting increased scrutiny. This article explores four market inefficiencies that remain poorly understood: ad effect measurement, frictions between and within advertising channel members, ad blocking, and ad fraud. Although these topics are not unique to digital advertising, each manifests in unique ways in markets for digital ads. The authors identify relevant findings in the academic literature, recent developments in practice, and promising topics for future research

When Does Brand Bidding Pay Off (Even) If Website Competition is Low?

Many companies place advertisements on search engine result pages, a practice referred to as search engine advertising (SEA). If their website also appears among the organic results, it is questionable whether SEA makes sense: Free clicks may be substituted by costly clicks on the advertisement (paid result). We propose a model that determines when paid results complement organic results and when they cannibalize them. The model explains both interaction effects by the characteristics of the triggering keyword and the specificity of the advertisement. We evaluate the model in a field experiment in the context of a quasi-monopolistic company and approx. nine million search queries that contain its brand names (brand bidding). This helps to reduce possible biases from competition and user heterogeneity. Preliminary results suggest that superior net effects can be achieved by placing ads for search queries that indicate a navigational or transactional search intention compared to informational searches

The Economics of Internet Media

We survey the economics literature on media as it applies to the Internet. The Internet is an important driver behind media convergence and connects information and communication technologies. While new Internet media share some properties with traditional media, several novel features have appeared: On the content side, aggregation by third parties that have no editorial policy and user-generated content have become increasingly important. On the advertiser side, fine-tuned tailoring and targeting of ads based on individual user characteristics are common features on many Internet media and social networks. On the user side, we observe increased possibilities of time-shifting, multi-homing, and active search. These changes have gone hand-in-hand with new players entering media markets, including search engines and Internet service providers. Some of these players face novel strategic considerations, such as how to present search results. In response to these changes, an emerging economics literature focuses on the allocative and welfare implications of this new media landscape. This paper is an attempt to organize these contributions and provide a selective account of novel economic mechanisms that shape market outcomes of Internet media. A large body of work has focused on the advertising part of the industry, while some studies also look at content provision and the interaction between the two

Achieving more by saying less? On the Moderating Effect of Information Cues in Paid Search

Research on ad copy design is well-studied in the context of offline marketing. However, researchers have only recently started to investigate ad copies in the context of paid search, and have not yet explored the potential of information cues to enhance customers’ search process. In this paper we analyze the impact of an information cue on user behavior in ad copies. Contrary to prevalent advice, results suggest that reducing the number of words in an ad is not always beneficial. Users act quite differently (and unexpectedly) in response to an information cue depending on their search phrases. In turn, practitioners could leverage the observed moderating effect of an information cue to enhance paid search success. Furthermore, having detected deviating user behavior in terms of clicks and conversions, we provide first indicative evidence of a self-selection mechanism at play when paid search users respond to differently phrased ad copies

Online Advertising

This chapter explores what makes online advertising different from traditional advertising channels. We argue that online advertising differs from traditional advertising channels in two important ways: measurability and targetability. Measurability is higher because the digital nature of online advertising means that responses to ads can be tracked relatively easily. Targetability is higher because data can be automatically tracked at an individual level, and it is relatively easy to show different people different ads. We discuss recent advances in search advertising, display advertising, and social media advertising and explore the key issues that arise for firms and consumers from measurability and targetability. We then explore possible public policy consequences, with an in depth discussion of the implications for consumer privacy

Interactivity: A review of the concept and a framework for analysis

The terms `interactivity' and `interactive media' became significant buzz-words during the late 1980s and early 1990s when the multi-media euphoria fascinated politicians, economists, and researchers alike. However, right from the beginning of the scientific debate, the inconsistent usage of the term `interactivity' massively complicated the comparability of numerous empirical studies. This is where this article joins the discussion. First, the article sheds light on the terminological origins of `interactivity' and distinguishes the term from cognate expressions. Further, it restructures and extends existing findings on the basis of a new analysis framework which considers three levels of interactive communication (action level, level of subjective situation evaluation, and level of meaning exchange). Finally, it delivers a systematic overview of specific criteria of interactive communication

The Role of the Mangement Sciences in Research on Personalization

We present a review of research studies that deal with personalization. We synthesize current knowledge about these areas, and identify issues that we envision will be of interest to researchers working in the management sciences. We take an interdisciplinary approach that spans the areas of economics, marketing, information technology, and operations. We present an overarching framework for personalization that allows us to identify key players in the personalization process, as well as, the key stages of personalization. The framework enables us to examine the strategic role of personalization in the interactions between a firm and other key players in the firm's value system. We review extant literature in the strategic behavior of firms, and discuss opportunities for analytical and empirical research in this regard. Next, we examine how a firm can learn a customer's preferences, which is one of the key components of the personalization process. We use a utility-based approach to formalize such preference functions, and to understand how these preference functions could be learnt based on a customer's interactions with a firm. We identify well-established techniques in management sciences that can be gainfully employed in future research on personalization.CRM, Persoanlization, Marketing, e-commerce,

Image Analysis to Assess the Impact of Photo Aesthetics on Online Consumer Click-through: An Empirical Study

Determinants of consumer’s shopping behavior are of long-term interest to researchers. Since product photos directly aid consumers’ understanding of products, retailers often put a lot of effort into polishing them. However, there is limited research on the impact of product photos on shopping behavior. This research takes advantage of image-processing techniques to study product photos’ impact. These techniques allow us to investigate a large set of photo characteristics simultaneously in an empirical study. To rule out possible confounding factors, we use a real company dataset from a social shopping Website, which has a simple interface allowing consumers to judge products mainly based on their photos. We employ two-stage nested logit model embedded with differences-in-differences approach and examine product photo characteristics from the aspects of color, composition, complexity, and model face. We found that consumers prefer to click product photos with a warmer color, a larger key object, appropriate complexity