QUACK, CURES AND CONSUMERS

Quack, Cures and Consumers

Quack, Cures and Consumers

Customers actively avoid looking at online banner ads. Response rates to banner ads have fallen dramatically over time. In reaction to this, online advertising on websites has developed along two strikingly distinct paths. On the one hand, the $11.2 billion1 online display advertising market has evolved beyond traditional banner ads to include many visual and audio features that make ads more obtrusive and harder to ignore. On the other hand, Google has developed a highly profitable non-search display advertising division (called AdSense) that generates an estimated $6 billion in revenues by displaying plain content-targeted text ads: 76% of US internet users are estimated to have been exposed to AdSense ads. This paper explores how well these divergent strategies work for online advertising and how consumer perceptions of intrusiveness and privacy influence their success or lack of it, both independently and in combination (Godes, 2009).

We examine the effectiveness of these strategies using data from a large randomized field experiment on 2,892 distinct web advertising campaigns that were placed on different websites. On average, we have data on 852 survey-takers for each campaign. Of these, half were randomly exposed to the ad, and half were not exposed to the ad but did visit the website on which the ad appeared. These campaigns advertised a large variety of distinct products, and were run on many different websites. The advertisers in our data used two core improvements on standard banner ad campaigns to attract their audience (Goldfarb, 2009). Some web campaigns matched the product they advertised to the website content, for example when auto manufacturers placed their ads on auto websites. Some web campaigns deliberately tried to make their ad stand out from the content by using video, creating a pop-up, or having ...