Banner ads — those ubiquitous rectangular advertisements that typically span the headings of Web pages — were once the bread and butter of online promotions. But as users learned how to ignore banner ads, they’ve been replaced by text-based advertisements such as Google Ads or flashy multimedia promotions.

A 2011 study from the University of Toronto and MIT Sloan School of Management published in Marketing Science, “Online Display Advertising: Targeting and Obtrusiveness,” explores the effectiveness of these strategies. Researchers tracked the reception of ads on 2,892 individual websites; half of the participants viewed a website with a specific ad, and the other half viewed the same website without the ad. The scholars note that, in 2009, the online display ad business — highly visual, “obtrusive” campaign ads such as pop-up ads, interactive and/or multimedia ads — constituted nearly half of all online campaigns and generated an estimated $11.2 billion in earnings; Google’s contextual AdSense campaign, seen by approximately three-quarters of all Internet users in the United States, generated $6 billion in revenue for the company in the same year.

Study findings include:

• Increasing an ad’s visibility, or level of obtrusiveness, improves viewer interest in purchasing the product or service. However, these types of ads may be construed negatively by the viewer: “Obtrusive ads may lead consumers to infer that the advertiser is trying to manipulate them [and] have a negative effect on consumer perceptions of the product advertised.”
• A typical “contextually targeted” ad whose content is tailored to match the content of its host website increases a viewer’s interest more than highly visible ads do. However, it tends to be less memorable than other types of advertising. “Contextually targeted ads are associated with higher purchase intent for the product, but people who see [them] are less likely to recall those ads.”
• While both contextual and obtrusive ads are successful individual strategies, an advertisement that both matches website content and is highly visual — 6.4% of the ads studied and $664 million of total online ad expenditures as of 2011 — actually makes the campaign less appealing to most viewers. This outcome holds true regardless of viewer age, gender, income or level of Internet use, with one notable exception: “younger female respondents who have lower incomes and spend more time on the Internet.”
• The researchers propose that the combination of flashy visuals and contextual information may unintentionally raise privacy concerns for viewers, especially when this type of ad is connected with potential disclosure of personal information such as financial or health-related services.

The researchers highlight the economic and policy implications of their findings: “There is mounting pressure in the United States and Europe to regulate the use of data on browsing behavior to target advertising.” Regulators, they suggest, need to acknowledge that changes to data collection practices may influence the types of online advertisements. Indeed, more stringent controls on targeting may result in deeper investments in highly intrusive ads. “Customers may dislike having data collected about their browsing behavior,” the authors conclude, “but they have also expressed dislike of highly visible ads.”

Tags: consumer affairs, technology, privacy, online ads, advertising, persuasion