Online Advertising Response Models: Incorporating Multiple Creatives and Impression Histories

41 Pages Posted: 28 Jul 2011 Last revised: 22 Jun 2014

Michael Braun

SMU Cox School of Business, Southern Methodist University

Wendy W. Moe

University of Maryland - Robert H. Smith School of Business

Date Written: August 7, 2012

Abstract

Online advertising campaigns often consist of multiple ads, each with different creative content. We propose a model that evaluates the effectiveness of each creative in a campaign given the targeted individual’s ad impression history, as characterized by the timing and mix of previously seen ad creatives. We examine the impact that each ad impression has on both visitation and conversion behavior at the advertised brand’s website. Our model is constructed at the individual level and takes into account correlations among the rates of ad impressions, website visits and conversions. We also allow for the accumulation and decay of advertising effects, as well as ad wear-out and restoration effects. Our results highlight the importance of accommodating both the existence of multiple ad creatives in an ad campaign as well as the impact of an individual’s ad impression history. We demonstrate with a simulation how this modeling approach can be used for online ad targeting. Specifically, our results suggest that, using our model, online advertisers can increase the number of website visits and conversions by varying the creative content shown to an individual according to that individual’s history of previous ad impressions. For our data, we show a 12.7% increase in the expected number of visits and a 13.8% increase in the expected number of conversions.

Keywords: Online Advertising, Advertising Response Modeling, Online Visitation and Conversion Rates, Bayesian Models

JEL Classification: M3, M30, M31, M37

Suggested Citation

Braun, Michael and Moe, Wendy W., Online Advertising Response Models: Incorporating Multiple Creatives and Impression Histories (August 7, 2012). Available at SSRN: https://ssrn.com/abstract=1896486 or http://dx.doi.org/10.2139/ssrn.1896486

Michael Braun

SMU Cox School of Business, Southern Methodist University ( email )

United States

Wendy W. Moe (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

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