Faculty of Economics and Business Administration Publications Database

Targeting online display ads: Choosing their frequency and spacing

Volume: 35
Number: 4
Pages: 661 - 672
Month: December
ISSN-Print: 0167-8116
Link External Source: Online Version
Year: 2018
Keywords: Banner advertising, Click-through rate, Online advertising, Online targeting, Real-time bidding

With real-time bidding, advertisers can decide how often (ad frequency) and in what time interval (ad recency) to show an ad to a specific user. Ads shown often and in quick succession might increase brand and ad recognition on the one hand but might annoy users on the other hand. These recognition and annoyance effects, in turn, can have opposing consequences for click-through rates (CTRs). Guided by theory and previous studies, we examine how the frequency (high vs. low) and the recency (small vs. large time intervals) of ad impressions relates to a banner's CTR and whether this is moderated by the campaign type (diverse or not), the brand's advertising expenditure (high vs. low), and the type of industry (selling durable vs. non-durable goods). To do so, we use a large data set containing information on 5.8 bn ad impressions and 1.8 m clicks delivered for 158 different advertisers from 25 industries. We show that higher ad frequency and higher ad recency relate to a lower CTRs, especially when having a less diverse campaign, for brands which are spending more on advertising, and, to some extent, for firms selling durables.