Mobile Ad Effectiveness: Hyper-Contextual Targeting with Crowdedness

Marketing Science 35 (2), 2016, pp. 218-233

Fox School of Business Research Paper No. 15-040

16 Pages Posted: 21 May 2014 Last revised: 20 Jun 2017

See all articles by Michelle Andrews

Michelle Andrews

Emory University

Xueming Luo

Temple University

Zheng Fang

Sichuan University - Business School

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business

Date Written: December 11, 2014

Abstract

This research examines the effects of hyper-contextual targeting with physical crowdedness on consumer responses to mobile ads. It relies on rich field data from one of the world’s largest telecom providers who can gauge physical crowdedness in real-time in terms of the number of active mobile users in subway trains. The telecom provider randomly sent targeted mobile ads to individual users, measured purchase rates, and surveyed both purchasers and non-purchasers. Based on a sample of 14,972 mobile phone users, the results suggest that counter-intuitively, commuters in crowded subway trains are about twice as likely to respond to a mobile offer by making a purchase vis-à-vis those in non-crowded trains. On average, the purchase rates measured 2.1% with fewer than two people per square meter, and increased to 4.3% with five people per square meter, after controlling for peak and off-peak times, weekdays and weekends, mobile usage behaviors, and randomly sending mobile ads to users. The effects are robust to exploiting sudden variations in crowdedness induced by unanticipated train delays underground and street closures aboveground. Follow-up surveys provide insights into the causal mechanism driving this result. A plausible explanation of the results is mobile immersion: as increased crowding invades one’s physical space, people adaptively turn inwards and become more susceptible to mobile ads. Since crowding is often associated with negative emotions such as anxiety and risk-avoidance, the findings reveal an intriguing, positive aspect of crowding — mobile ads can be a welcome relief in a crowded subway environment. The findings have economic significance because people living in cities commute 48 minutes each way on average, and global mobile ad spending is projected to exceed $100 billion. Marketers may consider the crowdedness of a consumer’s environment as a new way to boost the effectiveness of hyper-contextual mobile advertising.

Keywords: mobile advertising, hyper-contextual targeting, crowdedness, field study, new technology

Suggested Citation

Andrews, Michelle and Luo, Xueming and Fang, Zheng and Ghose, Anindya, Mobile Ad Effectiveness: Hyper-Contextual Targeting with Crowdedness (December 11, 2014). Marketing Science 35 (2), 2016, pp. 218-233; Fox School of Business Research Paper No. 15-040. Available at SSRN: https://ssrn.com/abstract=2439388 or http://dx.doi.org/10.2139/ssrn.2439388

Michelle Andrews

Emory University ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Xueming Luo (Contact Author)

Temple University ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

HOME PAGE: http://www.fox.temple.edu/mcm_people/xueming-luo/

Zheng Fang

Sichuan University - Business School ( email )

China

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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