A Dynamic Model for Digital Advertising: The Effects of Creative Format, Message Content, and Targeting on Engagement

Norris I. Bruce, B.P.S. Murthi, and Ram C. Rao
Article Snapshot
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Key Takeaways

What? Animated ads (i.e. flash, GIF) have higher carryover effects among targeted and re-targeted consumers compared to static ads. Additionally, price ads tend to be more effective than product ads.

So What? Advertisers often use multiple creative formats in digital campaigns to target and re-target consumers.

Now What? Marketers should use  animated ads and focus messages on price. As flash ads and GIFs have similar impact and GIF ads tend to be cheaper to create, marketers may want to go with GIF ads.

Article Snapshots: Executive Summaries from the Journal of Marketing Research
 
Research Question
Advertisers often use multiple creative formats in their digital campaigns to target and re-target consumers with product-based messages and price incentives. In this study, we ask the following open questions: How do carryover effects vary across animated and static ads, and their targeted consumers? What is the effect of format (size/position) on consumer engagement? What are the effects of price incentives and product ads within different digital formats? Which ad  message (price vs. product) are more effective for re-targeting.
 
Theory
The study accomplished its goal  by constructing a dynamic model and applying it to a panel dataset obtained from a major US retailer.The data offers a selection of daily ad impressions and their associated clicks, with both clicks and impressions disaggregated by consumer segment, ad format and message content. We propose a dynamic (state space) zero-inflated count model (Poisson), given the potential for zero-inflation and temporal correlation in count series. We estimated the resulting nonlinear/dynamic model using a combination of Particle Filtering and MCMC methods.
 
Findings
First, we find that animated ads had higher carryover effects; and thus affected engagement over a longer duration than static ads. Second, among animated formats, price ads were more effective than product ads. Third, re-targeted ads were effective only when they offered price incentives. Third, although flash ads were more effective at engaging consumers, simpler static GIF ads could also be effective; in our case, for price ads served to retargeted and female consumers. Lastly, all the retailer’s ads targeted to the female segment were effective.
 
Implications
Knowing the above features of digital ads, the effects of carryover, format, target, and message could help managers improve ad engagement. This, in turn, could ultimately help firms better allocate ad resources throughout their digital advertising campaigns.
 
Questions for the classroom
  • Re-targeting is the tactic of tracking visitors to a firm’s site, and then serving the firm’s ads to them once they visit other sites. Does it work? When does it work?
  • Many studies of digital ads have ignored carryover; others model carryover but treat it as homogenous. Why is it important to control for carry-over rates, and treat them as heterogeneous?
  • To study digital ads we need to account for zero-inflation and dynamics. What are some methods to do this?
Article Citation
Norris I. Bruce, B.P.S. Murthi, and Ram C. Rao (2017) A Dynamic Model for Digital Advertising: The Effects of Creative Format, Message Content, and Targeting on Engagement. Journal of Marketing Research: April 2017, Vol. 54, No. 2, pp. 202-218.
 

Author Bio:

 
Norris I. Bruce, B.P.S. Murthi, and Ram C. Rao
Norris I. Bruce (e-mail: nxb018100@utdallas.edu) is Associate Professor of Marketing, B.P.S. Murthi (e-mail: murthi@utdallas.edu) is Professor of Marketing, and Ram C. Rao (e-mail: rrao@utdallas.edu) is Founders Professor of Marketing, Naveen Jindal School of Management, University of Texas at Dallas.
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