Tuesday, July 07, 2009

Ad fatigue and relevance

At the recent Ad Auctions Workshop, I had a paper (PDF) and talk (PDF) that argued for discounting relevant advertisements more than we currently do.

To briefly summarize, if seeing bad ads causes people to look at ads less in the future (aka ad fatigue), then we should change our pricing in advertising auctions to promote relevant, useful ads. Likewise, we should charge bad ads more to compensate for the damage they cause.

The paper is not trying to be definitive. The paper only shows that ad fatigue could matter, not that it does actually matter. More work needs to be done to measure how much ad fatigue actually exists.

But, I hope this paper might motivate others to look more at ad fatigue, think more about long-term revenue instead of short-term revenue, and consider how it might be beneficial in the long-term to lower our pricing on relevant and useful advertisements.

The paper was done with Chris Meek from Microsoft Research and Max Chickering at Microsoft. It reports on a side project I did a year ago while at Microsoft Live Labs.


John Mount said...

Really good point- I think users do cary a bit of state (like how irritated they currently are with a site). And not pricing damaging this state leads to a tragedy of the commons situation where you mistakenly think that any marginal profit is worth torturing the user just a bit more. Also a side-effect of not running ads when it isn't really a true net-benefit would it would get rid of the price collapse of "run of network" ads.

Aaron said...

Very interesting. I'm going to read that PDF now.

I especially like "we should charge bad ads more to compensate for the damage they cause".

Currently, the low-relevance 'run on network' ads get bottom dollar pricing (50 cents CPM), because the publisher would rather earn something than nothing.

Charging high vs low CPMs for low-relevance ads ... I think that will be very difficult in real life.