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Bad ads cost publishers

News, 18 May 2015

NEW YORK: Annoying digital ads can cost more money than they earn for publishers, according to research which puts a price on their effect.

In The Economic and Cognitive Costs of Annoying Display Advertisements, a paper published in the Journal of Marketing Research, participants were paid for classifying emails with a variety of good and bad ads shown simultaneously on screen as well as no ads.

The authors found that a participant in the bad-ad condition would have to be paid an additional 0.153 cents per impression to do as much work as a participant in the no-ad condition. Or in terms more instantly recognisable to marketers, the cost of bad ads was $1.53 per thousand impressions (CPM).

And, quoting 2013 data from the Turn cloud marketing platform that found 53% of all display ad impressions paid between 10 cents and 80 cents CPM, the authors argued that bad ads could actually cost publishers more money than they bring in.

"Chasing page-views and impressions at scale has diminishing returns and makes a sites more vulnerable to bad ads," warned Jason King, ceo of Digital Content Next.

In attempting to maximize the sell-thru rate of inventory, he said, publishers were "chasing short-term revenue rabbits without understanding where that rabbit hole leads."

But users' tolerance for annoying ads will depend on a number of factors. If a website provides a unique service, for example, then tolerance will likely be higher than on those sites where switching costs are low, such as new stories from mass-market newswires.

At the same time, the researchers discovered that annoying ads had a negative impact on cognitive tasks. Users were more likely to notice this type of ad and to complain about them while also being more likely to abandon those sites where they were found.

In a different context, Millward Brown has shown that users do not get annoyed at seeing the same ad multiple times if the creative is good enough.

Data sourced from Journal of Marketing Research, DCN; additional content by Warc staff