Editor’s Note: This article originally appeared in the fall 2014 issue of the Chartbeat Quarterly, our once-a-season data science magazine.
When a television program goes to commercial break, we see a series of 30-second spots, rather than one continuous advert. That three minutes of commercial time generates more collective value to advertisers when it’s split up than if it were given to a single advertiser. So what happens if we apply the same principle to ads on the Internet?Our research
suggests that the longer an ad is in view, the greater the likelihood that a person will recall the brand behind the advertisement. However, according to multiple studies, after a short period of time, the effect of time on brand recall is greatly diminished (Figure 1)
This means that ads with higher active exposure time have higher value to advertisers, but only to a point. So why not exploit this fact by “refreshing” an ad after a fixed amount of time?Ad refreshing is not a new idea, but it is unpopular because ads refreshed traditionally—after a certain amount of wall clock time has passed—are unlikely to be seen. A series of non-viewable ads have no value to advertisers. On the other hand, if we refresh ads once they’ve been in view for a set amount of time, we can ensure that an ad was seen for a fair amount of time before changing it over to a new one and that the new ad will be viewed.This is an exciting idea because refreshing ads generates a large number of new viewable impressions. Traditionally, if a user is reading a page for two minutes with an ad in view, this person will only be exposed to one ad in a given position. If we refresh each ad after it’s viewed for 30 seconds, however, each single impression becomes four, generating three additional impressions, each of which is viewed. Table 1
shows the impact of different ad refresh times on viewable impressions and average exposure times across the Chartbeat network.
From Table 1
, we see that the number of viewable impressions on a typical site can be increased by as much as 93% if a 10-second ad refresh is used. This has the effect of almost doubling the inventory of viewable impressions on a site. On the other hand, we also see that this reduces the time that people spend with individual ads on average, because we are limiting the amount of time people can spend with an individual ad. This means that each refreshed impression has slightly less value to an advertiser than before. Because of this, we can probably expect that advertisers would require a discount to compensate for the loss of time.So, is ad refreshing worth it? Does the value of an increased inventory of viewable impression offset the loss in value to each refreshed impression? To answer this question, we will investigate the economic ramifications of ad refreshing.Our goal is to compare the value of the ad inventory on a typical site with and without ad refreshing.According to research at Yahoo
, the closer an ad is to the start of a session, the more likely a user is to recall the brand represented in that ad. This means that when refreshing ads, the ads shown first have more value than the ads shown later. In fact, the researchers
suggest that showing more than two ads in a single session is unlikely to be effective. Therefore, for our comparison we will only analyze single ad refreshes within an ad unit and we will make the following assumptions:
- Value of ad exposures to an advertiser can be quantified by recognition and recall.
- This value to advertisers correlates directly to revenue for the publisher.
- The value of first and second ad impressions are represented in Figure 2 relating exposure time to recall and recognition.
We use these assumptions to calculate a baseline value of the ad inventory for a typical site without ad refreshing and compare this to the value of the ad inventory using different ad refresh times.As we can see in Table 2
, ad refreshing does result in an increase in ad revenue. This means that the increase in viewable impression inventory outweighs the loss in value to refreshed impressions thanks to the diminishing returns in recall shown in Figure 2
agree that refreshing ads this way should increase a site’s revenue, and I think this calculation bares this out. For example, with a 10-second ad refresh the typical site gains 93% extra inventory of viewable impressions, and a 12% increase in revenue. Even with our relatively conservative calculation that only allowed for a single ad refresh, we see a healthy increase in revenue. For this reason, it seems likely that ad refreshing will be a significant source of new revenue for online publishers.