Beyond CPMs and clickthroughs: understanding consumer interaction with Web advertising

Measuring effectiveness of online ads is of critical importance to the survival of the Web as an advertiser-supported medium. Present efforts in measuring performance of Web ads are concentrated on adapting measures used in traditional media to the online medium (Novak and Hoffman 1996). However these measures do not take into account the unique interactive characteristics of the medium and hence differences in how consumers process advertising stimuli on the Web. Further ad processing and performance measurement capabilities differ across various advertising formats on the Web. This research proposes a framework to investigate how consumers interact with different advertising formats on the Web and identify metrics that reflect how effectively the ad is processed. BEYOND CPMs AND CLICKTHROUGHS: UNDERSTANDING CONSUMER INTERACTION WITH WEB ADVERTISING Introduction Advertising revenues are critical to survival of many commercial Web sites on the Web. Since advertiser-supported Web sites bear important parallels to traditional media in the physical world, established advertising practices can be borrowed from traditional media environments to assist initial commercial efforts. However, the complexity of the medium makes direct adoption of performance metrics problematic. As advertisers and marketers debate the best ways to measure response to Web ads, rate cards currently use aggregate ad reach (CPM impressions or pageviews) and ad click (clickthroughs) measures to value advertising space for most ad formats. A static banner ad impression and an interstitial impression lead to different processing outcomes – that rate cards ignore. Moreover declining clickthrough rates, and uncertainty concerning how ad exposure and clickthrough metrics relate to communication outcomes for the wide variety of ad formats used online are contributing to increasing skepticism regarding the value of advertising in this medium. In this chapter we discuss the various ad formats used by practitioners in the Web advertising industry. We use the information processing framework to investigate how consumer interaction with ads relate to communication outcomes that are of interest to marketers. Further, we identify the minimum (and predictable) measurable outcomes that the various ad formats are able deliver. The role of tracking technology in measurement of interactive outcomes and the implications for use of ad formats will be discussed. Figure 1 presents an outline of our approach for deriving response measures for ad formats at advertiser-supported Web sites. Figure 1. Framework for Relating Ad Processing to Performance Measures. Advertising Formats on the Web The Web with its audio, video, and interactive capabilities offers tremendous opportunity for effective and creative development of a variety of advertising formats. In this section we discuss ten ad formats commonly used by advertiser-supported sites on the Web. Together they account for 99% of ads posted at advertiser-supported Web sites at this time. Descriptions of ad formats AD FORMAT Assured minimum level of ad processing Highest level of ad processing possible Nature of Exposure Interactive technology Ad Characteristics -Creative Execution -Message -Placement Ad Processing Interactivity metrics Exposure metrics can be found in Zeff and Aronson 1999. In this research we discuss the ad formats in terms of their execution characteristics. Since research on information processing implications of Web ad formats is lacking (exception: banners ads) we classify them in terms of basic characteristics – nature of exposure, coverage of visual field and scope of interaction. Despite the rapid pace with which advertising formats on the Web are evolving, response measurement of most existing and future ad formats can be investigated in this framework. Table 1 shows how ad formats differ on the classification criteria and the metrics used to measure performance by the Web advertising industry. Exposures to ads on the Web may be incidental (similar to ads in traditional media) or on demand. Ad formats that are incidentally exposed (or passive advertising exposure, Chatterjee, Hoffman and Novak 2000) are typically encountered while the consumer is browsing through content at the Web site and hence under the control of the publisher. For these ad formats exposure (while predictable by the publisher) does not necessarily imply that the consumer has noticed the ad or is aware of it unless it covers a significant portion of the computer screen (or the consumer‟s visual field). If a consumer clicks on a passive ad, the consumer is either transferred to the advertiser‟s site or is exposed to a page, what we term the “target ad,” dedicated to the advertiser‟s message (Chatterjee 1996). A clickthrough is then recorded in the server access log. Table 1: Advertising Formats on the Web Ad Format Nature of Exposure Coverage of visual field Scope of interaction Measurement unit used Buttons & Static or animated banners Incidental Partial Limited to click CPM impressions, clickthroughs HTML banners Incidental Partial Radio buttons, Pull-down menu CPM impressions, clickthroughs Rich media banners Incidental Partial Radio buttons, Pull-down menus, fill-out forms, search, complete transactions CPM impressions, how long consumers interacted with it Interstitials Incidental Complete Limited to click CPM impressions Sponsorships and Advertorials Incidental Partial or complete Limited to click CPM impressions Text links or listings Incidental Partial Limited to click CPM impressions Ad navigation toolbars Incidental Partial Limited to click Number of downloads, usage time Browser bookmarks On demand Partial Limited to click CPM impressions Ad cursors Incidental Partial Limited to click Number of downloads Target ads On demand Complete Click to advertiser site, search and full range of interactive functions Number of unique visitors, number of clicks to advertiser site, time spent, purchase and other behavioral outcomes. Exposure to ads that are only displayed on consumers‟ demand (or active advertising exposure Chatterjee, Hoffman and Novak 2000) by clicking on them are under consumer control and hence performance numbers cannot be guaranteed by the publisher. Since exposure is solicited by the consumer, exposure necessarily implies that the consumer is aware of or has noticed the ad and hence has attended to it. Some ad formats occupy a relatively small portion of the screen (or consumer‟s visual field) and compete with other information on the Web page for the consumer‟s attention. Consumers can easily avoid seeing or noticing these ad formats (termed “ad blindness” in Web advertising industry) compared to more intrusive formats that occupy the entire screen thus ensuring awareness (and possibly irritation). Interactivity emerges as a unique characteristic distinguishing the Web from other traditional media. Steuer (1992) defines interactivity as “the extent to which users can participate in modifying the form and content of a mediated environment in real time”. Ad formats differ in the scope of interaction they allow. This may range from a limited click response in static banner ads to a full range of interactive features in rich media ads. Interactive technologies like InterVU (www.intervu.com), Narrative Communications‟ Enliven Technology (www.enliven.com), and Macromedia‟s Flash (www.macromedia.com/software/flash) allow users to interact by providing search facilities, audio and video capabilities, ability to play games and enter contests, send e-mail and complete purchase transactions without ever leaving the publisher‟s site. A Model of Interaction with Web Advertising Formats Research in advertising indicates that in order to produce a response, all advertising stimuli must proceed through three stages: exposure, attention and processing (cf. Mitchell 1983) in order. The hierarchical model of ad processing (Greenwald and Levitt 1984) suggests that if processing at one level fails to evoke the next highest level, processing of the ad is terminated and the capacity is allocated to some other task (i.e., navigating editorial information at the publisher Web site). Chatterjee, Hoffman and Novak (2000) propose a model of a consumer‟s interaction with banner (passive) ad stimuli during network navigation at an adsupported publisher Web site. A session at a Web site starts with the first access of any page at the site and ends with last page accessed before the consumer exits the site. Figure 2 depicts our proposed model of interaction with Web advertisement. Interaction with an ad stimulus starts when a consumer is exposed to a Web page that has an ad on it representing the opportunity to view the ad. Figure 2. Model of Consumer Interaction with Web Advertisement Information Processing Stages Enduring Effects when Ad Processing Ad Format is terminated at this stage Characteristics*