Key Success Factors for Online Advertising

Only available on StudyMode
  • Download(s) : 56
  • Published : March 24, 2013
Open Document
Text Preview
Social Advertising
Catherine Tucker∗ February 15, 2012

Abstract In social advertising, ads are targeted based on underlying social networks and their content is tailored with information that pertains to the social relationship. This paper explores the effectiveness of social advertising using data from field tests of different ads on Facebook. We find evidence that social advertising is effective, and that this efficacy seems to stem mainly from the ability of targeting based on social networks to uncover similarly responsive consumers. However, social advertising is less effective if the advertiser explicitly states they are trying to promote social influence in the text of their ad. This suggests that advertisers must avoid being overt in their attempts to exploit social networks in their advertising.

Catherine Tucker is Associate Professor of Marketing at MIT Sloan School of Management, Cambridge, MA. and Faculty Research Fellow at the NBER. Thank-you to Google for financial support and to an anonymous non-profit for their cooperation. Thank-you to Jon Baker, Ann Kronrod, Preston Mcafee, and seminar participants at the George Mason University Roundtable on the Law and Economics of Internet Search, the University of Rochester, UCLA and Wharton for valuable comments. All errors are my own.



1

Electronic copy available at: http://ssrn.com/abstract=1975897

1

Introduction

Recent advances on the internet have allowed consumers to interact across digital social networks. This is taking place at unprecedented levels: Facebook was the most visited website in the US in 2010, accounting for 20% of all time spent on the internet, a higher proportion than Google or Yahoo! (ComScore, 2011). However, it is striking that traditional marketing communications have been at the periphery of this explosion of social data despite the documented power of social influence on purchasing behavior. Much of the emphasis on marketing in social media, so far, has been on the achievement of ‘earned reach,’ whereby a brand builds its subscriber base organically and also hopes that this will influence others organically through sharing links with their social networks (Corcoran, 2009). However, recent research by Bakshy et al. (2011) has emphasized that this kind of organic sharing is far rarer than previously supposed, and that there are very few examples of a commercial message being consistently transmitted across social networks. Further, Tucker (2011a) shows that in order to achieve virality, an advertiser may have to sacrifice the commercial effectiveness of their message. This means that advertisers may need to use paid advertising to facilitate the sharing of their commercial message through social networks. Both Facebook and LinkedIn have recently introduced a new form of advertising called ‘social advertising.’ A social ad is an online ad that ‘incorporates user interactions that the consumer has agreed to display and be shared. The resulting ad displays these interactions along with the user’s persona (picture and/or name) within the ad content’ (IAB, 2009). This represents a radical technological development for advertisers, because it means that potentially they can co-opt the power of an individual’s social network to target advertising and engage their audience. This paper asks whether social advertising is effective, and what active steps advertisers themselves should take in their ads to promote social influence.

2

Electronic copy available at: http://ssrn.com/abstract=1975897

We explore the effectiveness of social ads using data from a field experiment conducted on Facebook by a non-profit. This field experiment compared the performance of social ads with conventionally targeted and untargeted ads. The social ads were targeted to the friends of ‘fans’ of the charity on Facebook. The ads featured that fan’s name and the fact that they had become a fan of this charity. We find that on average these social ads were more...
tracking img