Ghost Ads: Improving the Economics of Measuring Online Ad Effectiveness

59 Pages Posted: 19 Jun 2015 Last revised: 13 Jan 2017

Date Written: January 12, 2017

Abstract

Abstract To measure the effects of advertising, marketers must know how consumers would behave had they not seen the ads. We develop a methodology we call `Ghost Ads,' which facilitates this comparison by identifying the control-group counterparts of the exposed consumers in a randomized experiment. We show that, relative to Public Service Announcement (PSA) and Intent-to-Treat A/B tests, `Ghost Ads' can reduce the cost of experimentation, improve measurement precision, deliver the relevant strategic baseline, and work with modern ad platforms that optimize ad delivery in real-time. We also describe a variant `Predicted Ghost Ad' methodology that is compatible with online display advertising platforms; our implementation records more than 100 million predicted ghost ads per day. We demonstrate the methodology with an online retailer's display retargeting campaign. We show novel evidence that retargeting can work as the ads lifted website visits by 17.2% and purchases by 10.5%. Compared to Intent-to-Treat or PSA experiments, advertisers can measure ad lift just as precisely while spending at least an order of magnitude less.

Keywords: advertising effectiveness, field experiments, digital advertising

JEL Classification: M37, C93

Suggested Citation

Johnson, Garrett and Lewis, Randall A. and Nubbemeyer, Elmar, Ghost Ads: Improving the Economics of Measuring Online Ad Effectiveness (January 12, 2017). Simon Business School Working Paper No. FR 15-21. Available at SSRN: https://ssrn.com/abstract=2620078 or http://dx.doi.org/10.2139/ssrn.2620078

Garrett Johnson (Contact Author)

Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States
6173534677 (Phone)

HOME PAGE: http://www.bu.edu/questrom/faculty-research/faculty-directory/garrett-johnson/

Randall A. Lewis

Netflix ( email )

Los Gatos, CA
United States
312-RA-LEWIS (Phone)

HOME PAGE: http://www.econinformatics.com/

Elmar Nubbemeyer

Google Inc. ( email )

1600 Amphitheatre Parkway
Second Floor
Mountain View, CA 94043
United States

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