BOSTON: Generic ads can be more effective than personalised ones depending on what stage of the purchase cycle the consumer has reached, new research has suggested.
Anja Lambrecht, Assistant Professor of Marketing at London Business School, and Catherine Tucker, Associate Professor of Marketing at MIT Sloan, carried out a randomised control trial on an online travel site that showed both generic retargeted ads or dynamic retargeted ads to consumers.
Writing in the Harvard Business Review, they explained that, on average, they found dynamic retargeting, in this case ads showing the specific hotel people had looked at, was less effective than a generic ad for the travel site itself.
Further analysis looked at the effectiveness of different types of retargeting before and after consumers had visited a travel review site and discovered that customers responded positively to both types of ad after having been to a site of this kind.
The authors suggested this difference was a result of the way people go about their purchases. When consumers have a general idea of what they want then a generic ad is best, but when they get more specific then personalised ads can work better.
"If a consumer has not yet decided whether to make a trip to Greece or to Florida, there is no point showing them a specific hotel in Greece," the report added.
Lambrecht and Tucker concluded that marketers needed to be careful when using personalized advertising.
"It may appear to be effective only because firms tend to show personalized ads only to their very best customers, possibly because of a lack of data on other potential customers," they argued.
"Optimal advertising content varies over time and should be honed to reflect the stage the customer has reached in the purchasing process."
Anja Lambrecht, Assistant Professor of Marketing at London Business School, and Catherine Tucker, Associate Professor of Marketing at MIT Sloan, carried out a randomised control trial on an online travel site that showed both generic retargeted ads or dynamic retargeted ads to consumers.
Writing in the Harvard Business Review, they explained that, on average, they found dynamic retargeting, in this case ads showing the specific hotel people had looked at, was less effective than a generic ad for the travel site itself.
Further analysis looked at the effectiveness of different types of retargeting before and after consumers had visited a travel review site and discovered that customers responded positively to both types of ad after having been to a site of this kind.
The authors suggested this difference was a result of the way people go about their purchases. When consumers have a general idea of what they want then a generic ad is best, but when they get more specific then personalised ads can work better.
"If a consumer has not yet decided whether to make a trip to Greece or to Florida, there is no point showing them a specific hotel in Greece," the report added.
Lambrecht and Tucker concluded that marketers needed to be careful when using personalized advertising.
"It may appear to be effective only because firms tend to show personalized ads only to their very best customers, possibly because of a lack of data on other potential customers," they argued.
"Optimal advertising content varies over time and should be honed to reflect the stage the customer has reached in the purchasing process."
Data sourced from Harvard Business Review; additional content by Warc staff
