Research shows customized online ads are often ineffective

CHICAGO, Sept. 4, 2013 /PRNewswire-USNewswire/ -- Ads tailored to individual's are often ineffective, according to a recent study by Anja Lambrecht, Assistant Professor of Marketing at London Business School and Catherine Tucker, Associate Professor of Marketing at MIT Sloan School of Management.

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The research, which appears in the October issue of the American Marketing Association's Journal of Marketing Research used data provided by Havas Digital from Artemis, to address the questions of whether it is always optimal for advertisers to provide more specific advertising content based on consumers' earlier product interests, as well as when increased specificity of information in an ad is effective. 

The researchers found that people who saw the personalized product information were on average less likely to buy a product on the day they were shown the ad than the people who were shown the more generic version. Highly-specific ads were generally not more effective than generic messages. This goes against the conventional wisdom that more specificity is always good.

However, Lambrecht and Tucker did find that under certain circumstances, this type of specific ad did work. The key, they said, was whether the consumer had developed well-defined product preferences at the time they saw the ad. When online shoppers were simply looking at a product category, advertisements that matched their prior web browsing interests were ineffective. However, after consumers had visited a review site to seek out information about product details – and had better defined what product they were looking for and were closer to a purchase – then personalized ads no longer underperform relative to generic ads intended for a mass audience. This positive effect of personalized ads is augmented further if the consumer is involved in the category as proxied for by browsing other websites in the category.

As a result, notes Lambrecht, marketers should carefully evaluate when to use new online advertising techniques, paying attention to how they can identify whether a consumer thinks broadly about a product category or seeks out detailed information. "In our study, we took visiting a category review site as an indicator for being likely to have well-defined product preferences. Consumers who had not yet visited a category review site, were more responsive to generic messages. But consumers who had visited these sites to compare products and were involved in the product category reacted more positively to an ad that specifically reflected the product they had looked at earlier," said Anja Lambrecht, Assistant Professor of Marketing, London Business School. 

This was a "big surprise," says Tucker, as there has been a lot of excitement about using this new technique in online advertising where marketers can reach consumers with messages that are a better fit based on their known interests. "But it turns out that just because you have the data to personalize, it doesn't mean you always should," she says.

About the AMA

About the American Marketing Association:
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SOURCE American Marketing Association