Standardization and the Effectiveness of Online Advertising

If you want to advertise online, this can be done in a few moments. You deliver your advertisement in specific format to an advertising platform and it will be online in minutes. We all know these advertisements, we see them all day. For companies, this standardization means that it is easier to promote products and coordination costs are largely reduced.

However, it is not all cakes and ale. Limiting advertising in a specific format reduces the ability to differentiate yourself with your advertisement and hereby attract attention. Consumers get used to the standardized formats of advertising, and thus pay less attention.

Goldfarb and Tucker (2014) examines how standard advertising formats influences the effectivity of online display advertising. They talk about the challenges and explore remedies to overcome these challenges.

The influence of standard advertising formats is interesting because a lot of companies see the standardized advertising as an opportunity to decrease their costs while reaching the same audience as before. However, it is questionable if the same audience is reached, if no one notices the advertisement. Then the reduce in costs is useless. Also, advertisers personalize advertising to attract the attention of consumers (Bleier and Eisenbeiss, 2015). By personalizing advertising (i.e. retargeting), advertisers make the advertisement more relevant to users, which attract users and make it more effective (Goldfarb and Tucker, 2011). However, if standardizing influences the attractiveness negatively, then companies might want to reconsider their efforts in personalizing advertising or using standard formats for advertising.

To find out the relationship between standardized formats and the effectiveness Goldfarb and Tucker (2014) conducted an experiment where one group was shown the standardized advertising, and the other the non-standardized advertisement. After that, they measured the difference in purchase intention.

They find that standardization reduces advertising recognizing and purchase intention. This is due to the standardized advertisement. People are less attracted to standardized advertising and hereby the effectiveness decreases. However, standardizing does not affect more original advertisements. In other words, more creative advertising reduces the negative effect of standardizing online display advertising.

The results of the study show that there is a trade of between standardizing advertising, and saving costs here, and effectiveness, reducing benefits here. This effect is muted by how creative the content is. Advertising is more creative when advertising agencies created the advertisement.

The main strength of this paper is that this study shows that standardizing advertising is not as positive and beneficial as it seems to be on the first view. This paper explains the decrease in effectiveness in the field of online display advertising. The main managerial implication is the finding that standardization did not affect all advertisements negatively. Hereby, giving companies opportunities to make a trade-off when they consider to use online display advertising. When companies consider to advertise online, now they do not only have to consider whether they want to use a standardized format. But they are also able to evaluate if they want to create the advertisement themselves, and taking the risk of less creative advertising. Or let a specialized advertising agency create the advertising, resulting in more creative advertising, for higher costs.

Bleier, A., & Eisenbeiss, M. (2015). Personalized online advertising effectiveness: The interplay of what, when, and where. Marketing Science34(5), 669-688.

Goldfarb, A., & Tucker, C. E. (2011). Privacy regulation and online advertising. Management science57(1), 57-71.

Goldfarb, A., & Tucker, C. E. (2014). Standardization and the effectiveness of online advertising. Management Science61(11), 2707-2719.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s