Monday, May 11, 2015

Purchase Intent of Consumers Has Instigated the Rapid Rise of Online Advertising, Bringing Drawbacks Such as Digital Privacy Concerns for Online Users


  • Online advertisements differ in functionality and size in order to attract a large consumer base  
  • Through eye-tracking methods and other studies, research has shown which strategies advertisers should utilize to increase purchase intent of consumers
  • Digital privacy issues have become a concern to online users because of “cookie files” and retargeted advertisements that track their online behavior

The onset of the Internet brought about a number of things- information, networking, and online shopping to name a few- and with these new facets, online advertising has become a new tool for advertisers, as well as a source of revenue for publishers of websites.  Online advertising is a booming business, garnering approximately $121 billion globally in 2014 with the potential to reach about $140 billion in 2015.  Why are advertisers spending such impressive amounts of money on these advertisements?  This question boils down to one answer: online consumers.  Through research conducted by advertisers, online advertisements are perfected to catch the eyes of consumers and increase their purchase intentions.  Through methods such as size, placement, increasing noticeability, and matching ad content to the webpage content, advertisers are constantly learning how to curate ads to attract consumers.   


Online display advertisements vary in functionality and size in order to attract online users 


Data taken from 2013 IAB
Internet Advertising Revenue Report
Online display ads are graphic images that vary in size, animation, duration, size etc. that are used as a form of marketing that use the Internet to deliver messages.  Display advertisements can be a range of types including static ads, which are simple images that are hyperlinked to an advertiser’s site.  They combine only still images and text. Another type is animated ads, that contain .GIF or Flash formats, meaning that the ads contains movement.  Interactive ads contain tools and games that give the user some type of function in addition to bringing them to the advertiser’s site.  Video ads play a video for the user that can either play automatically, or can be user-activated depending on the ad- these are the most expensive because they have a high CTR, or click through rate of users.  Yet another type are expanding ads that increase in size when the mouse rolls over it or when the ad is clicked.  The expanding ads have variability in the sense that they start as a static image and expand into a video ad.  Increasing functionality of online ads may be expensive for advertisers, but they do reap rewards- the revenue generated by online ads in the United States far surpasses other types of media in the US that displays ads, at an astonishing 43 billion dollars.  The pie chart on the upper left illustrates this idea.


Online ad sizes vary greatly- the 3 most common are leaderboards (or banners), medium/large rectangles, and skycrapers (or towers).  Leaderboards are typically found at the top or bottom of a webpage that stretch from end to end.  Medium/large rectangle ads are another type, and usually interrupt the text content, which gives the ad a higher chance of being noticed by the user.  Skyscraper ads are tall ads that typically run down the left or right side of a site.  Doron Haramati, an analyst at Nielsen, the American global information and measurement company in New York, explains why certain dimensions of ads can be essential for attracting online Internet users. 

Research has shown which strategies advertisers use that increase purchase intent through eye-tracking studies


Eye-tracking studies are helpful in seeing how long users view online ads, as well as click-through rate (if the user clicks the ad).  EyeTrackShop, an award winning market research company, conducted a study where participants allowed researchers to access their webcams, which were then adjusted to calculate eye movement as webpages were viewed.  Researchers concluded that there were certain factors that were most important to a consumer spending time to ads online.  Ads that are placed “above the fold,” or that are placed in the top content area of the webpage, are higher in terms of visibility, time spent, and time to notice, as opposed ads that are placed in the bottom content area.  Data also suggests that an ad placed at the bottom of the screen, but still above the fold, is seen 225% more quickly than some leaderboard ads at the top of the page, because many users skip ads placed on top, since they scroll quickly and assume those top ads are irrelevant. Mr. Haramati expands on the idea of users scrolling quickly past ads, with a term known as “banner blindness.” 

Non-traditional placement of ads, or ads placed in unconventional places (e.g., integrated into a search result), are more effective than ads that are in traditional places.  In another test conducted by EyeTrackShop, participants saw ads that were placed unconventional in the margins of a webpage 50% more quickly than the standard display ads towards the middle of the page.  The last factor that EyeTrackShop concluded was important in effectiveness of ads (besides placement) is relevance. Matching content of the ad to the content of the webpage makes it easier for users to recall the ad.  For example, in another test run by EyeTrackShop, an ad for a brand that was not well known (fluless.com) was recalled 82% more by participants than a more well known brand (AT&T/Android) just because the fluless.com ad was related to the content of the webpage. 


Eye tracking is used to see where
an individual focuses his/her gaze
on an advertisement
study conducted by Massachusetts Institute of Technology (MIT) explored the reactions of consumers to online ads.  They discovered that obtrusive ads (which makes the ads more noticeable to users by placing the ads in unlikely places) or matching an ad to website content do increase purchase intent of consumers (by ~4%), however both strategies used together are ineffective at increasing purchase intent of consumers.  It is surprising that both methods yield a positive result separately, while together they both cause a negative effect.  A reason MIT lends to this phenomenon is that users may view these strategies combined as a manipulative advertising tactic, thus lowering purchase intentions.  Because deception online is so common, users are particularly aware of manipulative behavior so that obtrusive and targeted ads may make the user more aware of the targeted nature of these ads.  Privacy concerns are another issue users may become aware of, where the usual customer appreciation of targeted ads (because of their helpfulness), is disregarded because of the obtrusiveness of said ad.  

Mr. Haramati elaborates on 3 items an online advertisement should contain in order to attract online users.


Privacy issues may be a concern to online users who are exposed to “cookie files” and retargeted advertisements


Cookie files and Retargeting
explained through this visual
In order to match content of an ad to the content of a webpage, companies use cookie files to track online users and store information about their preferences.  The company then buys ad space on another site, where they can embed new ads that display products someone has previously viewed and is interested in.  These ads that have been created through cookie files are also known as retargeted ads.  Retargeted ads are extremely common on most sites on the Internet.  The reasoning behind this method is that, because the user has already displayed interest in the item, advertisers think the user is a more eligible prospect than someone else to buy the item.  Methods like these are of concern to online users who fear their privacy is being compromised.  This has led to the introduction of bills in Congress, who have called for a tighter regulation of digital privacy, like the 'Do Not Track' Privacy Bill, that enables certain systems to give users the ability to opt out of behavioral advertising.  

While many online users are aware of ads on webpages, most people are unaware of how much these ads affect them.  Where an online ad is placed, why the ad matches the webpage content, and even just the dimensions of the ad are carefully curated in order to attract consumers and increase their purchase intent.  Furthermore, digital privacy concerns have become an issue with ads due to cookie files and retargeting.  With these factors in mind, it is important to be knowledgable about the content users view online so that they can make informed decisions when purchasing products and so that digital privacy issues can be resolved.  

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