Are Web Ads Only for Oldsters? Yahoo’s Disturbing Study.
Brand advertising, the kind you’re used to seeing on TV and in print, isn’t nearly as big on the Internet as the search ads dominated by Google (GOOG). But that’s got to change, as marketers realize that traditional advertising works on the Web, too.
The above is an article of faith among a certain kind of Web publisher. And some of them are even paying for studies to prove that display ads–basically all the ads you see that aren’t part of search results–really do work on the Web.
Except when they don’t. That’s the unsettling conclusion that some research funded by Yahoo (YHOO) recently reached, the San Francisco Chronicle reports.
The study was produced by the Web giant’s Yahoo Labs, which has been getting new attention in the Carol Bartz regime and beefing up its staff of social scientists by “adding highly credentialed cognitive psychologists, economists and ethnographers from top universities around the world.”
One of the new hires, economics professor David Reiley, tried to track the benefits of a Yahoo ad campaign on behalf of a retail chain. He found that the ads did work, but only for people born before Woodstock:
The research, conducted in partnership with an undisclosed national retailer, sought to accurately measure the impact of Internet display advertising across online and offline sales, by tracking people who had registered with both Yahoo and the store. The research found an approximately 5 percent increase in spending among those who had seen the ads–with 93 percent of those sales occurring in stores.
The potentially worrisome thing, however, was that among those under 40, the percentage was nearly zero. That could reflect the unpopularity of the particular retailer among that demographic. Or it could underscore a growing immunity to display advertising among the Web-savvy younger generation.
Yikes. I asked Yahoo for its take on the study and the company sent me a (not surprisingly) sunnier summary of the research. Some of its highlights:
Major Findings:
By combining a controlled experiment with panel data on purchases, we find statistically and economically significant impacts of advertising on sales.We estimate the total effect on revenues to be more than eleven times the retailer’s expenditure on advertising during the study.
93% of the effect was on offline (in store) sales.Persistence: The effects of the campaigns were persistent over time, meaning that the sales impact could be tracked for a period of time after the campaign ended.
Demographics: there was no significant correlation or differences w/r/t location (by state) or gender.
But there was a significant difference w/r/t to age: customers over the age of 40 were significantly more responsive to the ads in terms of sales. The largest effect came from senior citizens (65+).
Clicks versus non-Clicks: Though clicks are a standard measure of performance in online-advertising, we find that online advertising has substantial effects on those who merely view but do not click the ads.
We find that 78% of the effect in sales comes from those who view ads but do not click them, while only 22% can be attributed to those who click.
Count me among the group disposed to think that brand ads on the Web do work, by the way. But then again, I have a vested interest in this being true since it’s what’s supposed to keep me clothed and fed. I’d hate to see scientific proof that it’s all a pipe dream.
For a contrary perspective, funded by people whose interests align with mine, check out this study funded by the Online Publishers Association.
[Image credit: pedrosimoes7]
Comments
As someone who is 61 years old, I can assure you that ads on the InnerTubes® have absolutely zero effect on my purchasing expenditures.
Thank you Firefox and AdBlock Plus.
The sad thing is that I could have attended Woodstock, but I foolishly chose to work that week so as to have more money for the school year. Oh well.
Posted by davebarnes at January 12th, 2010 at 9:24 pmHi Peter,
Good find. Very interesting.
Do you know if the campaign was exclusively banners or was there greater brand exposure? If my bent it isn't obvious already we find that banner blindness means brand campaigns have to have multiple touch points, ideally one created for the publication's audience. From all I've seen Yahoo! hasn't been in a position to do custom brand campaigns for some time.
However with the enhanced Lab and hires I would expect Yahoo! to make good progress by the end of the year.
This is our bread and butter too, so these finds are great. Thanks!
Posted by Ted Rheingold at January 12th, 2010 at 10:53 pmPeter,
This is indeed a problem. Most of web revenues come from direct response advertising. They have made very little headway with display ads (which is why you can see the effect of the web in newspaper ad revenues, but nowhere else).
Interestingly, Google and Yahoo seem to really understand the problem, although few others in the digital world follow suit.
Web video is supposed to solve the problem, but hasn't made much headway. Ironically, the biggest obstacle is that digital media doesn't know as much about it's users as TV does.
I'm sure the problem will get cleared up eventually, but for the moment, digital people seem to be a little slow to catch on.
- Greg
Posted by Greg Satell at January 12th, 2010 at 11:37 pmI'm not really impressed with this vague, kind of lazy finding.
1) Brand plays a major role. National retailer? Yeah, Sears is a national retailer. So is H&M. One skews slightly different.
2) Where did these ads even run? On the Yahoo network? That's kind of a big place. Lots of older skewing verticals, i.e. local news, weather, finance, etc. Was this a causality of poor media planning?
3) What did the creative look like? Was it engaging? Did it allow for interaction, or was it BORING 40k standard load flash? Or worse…… static?!
Yeah, all of these things would have an effect on a campaign and the demo it would attract.
Posted by bigshot17 at January 13th, 2010 at 4:52 amYahoo produced a 40-page paper and companion deck. Do you guys want to plow through all of it? I'll ask them and see if they'll share the whole thing.
Posted by PKafka at January 13th, 2010 at 2:12 pmWithout knowing the identity of the retailer, the media placement or seeing the creative, these results don't mean much.
Posted by Pauline Waller at January 13th, 2010 at 2:52 pmI think the reason ads seem to work on older users is that younger users are more web savvy, which means the vast majority of them have ad blocking software installed. (I use Adblock and haven't seen an ad in ages).
Older users are not quite as savvy to know how to block ads.
Posted by facebook-1158532714 at January 13th, 2010 at 9:59 pmAdvertisement is the most important part for our product to get popular in the market. But there some of the negative listings of effects of advertisement on children like to keep the audience attached to view the whole ad; some commercial makes use of dangerous stunts, which may be reciprocated by kids at home, which can prove harmful for their health. The statutory warnings are hardly recognized by any younger kids.
Posted by jhon7smith at February 19th, 2010 at 3:30 pm