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28 Feb 2017

Research: Questioning the Effectiveness of Contextual Television Advertising

Ivan Guitart et Guillaume Hervet sont Professeurs assistants à Grenoble Ecole de Management.

As businesses and marketing go digital, companies have to track the effectiveness of their advertising across many channels. The growth of online transactions has made website conversions an essential factor for many businesses. Thanks to detailed data, researchers can track the effectiveness of television advertising for online conversions. 

This article from Ivan Guitart and Guillaume Hervet is the subject of the 33rd GEM LAB Executive Summaries.

Contextual advertising refers to the delivery of ads in related editorial contents. For example, a company might place a car ad during a TV show that speaks about cars.

With the growth of new technology, contextual advertising has been on the rise in the television industry. However, the researchers note that the impact of contextual advertising has yet to be clearly demonstrated.

Contextual versus neutral advertising

To explore this issue, the researchers collaborated with an online price comparison company that sells car insurance, health insurance and compares banking fees. The company provided the researchers with access to their past advertising campaigns as well as google analytics data to track conversions.

The company's TV ads were divided into two categories: Contextual car insurance ads that were placed during TV shows related to cars, and neutral ads that were placed during shows that were unrelated to the company's car, health and banking products. Following this categorization, the researchers studied the short and long-term impact on conversion for all three of the company's products.

Little to gain from contextual advertising?

The results of this study led the researchers to recommend that the company not rely on contextual advertising. The reason for this recommendation lies in the fact that the net impact of contextual advertising on conversions for the three products was smaller than the net impact of neutral advertising. The effectiveness of car-contextual ads was lower due to two factors.

First, car-contextual ads did not generate more conversions than neutral ads for the company's car insurance product. Second, car-contextual ads did not generate any conversions for the company's health and banking products whereas neutral ads increased conversions for all three products.

Spillover inhibition effect for contextual ads

The results of the study highlighted that contextual ads can create a spillover inhibition effect. The effect of neutral ads spilled over to the three products, whereas car-contextual ads were only effective for the car insurance product. Thus, placing ads in car-contextual shows inhibited the beneficial spillover created by neutral ads.

While these results led to the recommendation that the company should not rely on contextual advertising, the researchers underline that these findings are specific to the product category they studied. As a result, they might not apply to every business. However, the results highlight the importance of tracking and assessing ad performance as this enables companies to determine if contextual advertising is right for them.

Key points

  • Contextual advertising refers to ads that are delivered in related editorial contents (e.g., car insurance ads played during car shows).
  • Contextual television ads might not be more effective than neutral ads
  • Companies should track and assess the effectiveness of their ads in order to determine if contextual advertising is right for them.
Contacts
Mara Saviotti