We’ll Be Back After These Messages -- Will You?

Jun 23, 2009

(PhysOrg.com) -- For at least 50 years, television advertisements have been ordered randomly within commercial breaks. But given the spread of digital video recorders (DVR) that allow users to blip-blip past the ads in fast-forward, it’s time to change this business model to maximize ads’ effectiveness, according to a new study out this week.

The research, by Kenneth C. Wilbur of Duke University’s Fuqua School of Business and David Kempe of the University of Southern California’s Viterbi School of Engineering, will be presented by Wilbur on June 23 at the Advertising Research Foundation Measurement 4.0 conference in New York City. The report also will be released this week via the Social Sciences Research Network.

“Think of two very different ads: the iconic Coca-Cola polar bears commercial, and a commercial for ‘natural male enhancement,’” said Wilbur. “The Coke ad will keep the audience glued to its screen, but the other ad will annoy some viewers, causing them to fast-forward or switch the channel. If the Coke ad is placed first during the commercial break, it still delivers most of the audience to the second ad. But if the Coke ad is placed second, it gets a significantly smaller audience.”

To account for these types of ad sequencing issues, the researchers have developed the Audience Value Maximization model. This new algorithm shows how to optimally select, order and price ads based on a that considers advertisers’ willingness to pay and viewers’ propensity to switch channels during commercial breaks.

networks historically have managed and sold advertising time. We propose a fundamental shift, with networks managing and selling the truly scarce resource in this industry: viewers’ attention,” said Wilbur. “The Audience Value Maximization Algorithm uses principles of consumer acceptance employed in Internet advertising, which increase viewer utility of ads and reduce ad avoidance.”

Under the current pricing structure, advertisers have limited incentive to retain viewers to watch subsequent commercials by other advertisers. For example, if an auto dealer features a screaming salesman in an advertisement, the dealer may increase the effectiveness of the ad by 20 percent while driving 10 percent of viewers to change the channel. The auto dealer comes out ahead, but he has reduced the audience remaining to watch subsequent commercials. The Audience Value Maximization Algorithm would charge the dealer for the 10 percent of the audience his ad repelled.

“If all advertisers share the same motivation to create ads that enhance sales while retaining the maximum number of viewers, the number of people avoiding television commercials will be reduced significantly,” Kempe said. “However, if advertisers are penalized or rewarded for their ads’ audience losses or gains, they would design to hold viewer attention to a greater degree, enhancing overall efficiency.”

The Audience Value Maximization Algorithm is a mathematical formula that utilizes market data to help television outlets select, price and order advertisements to maximize audience value. Complete details of the new research are available for free download at papers.ssrn.com/sol3/papers.cfm?abstract_id=1423702 .

Provided by Duke University (news : web)

Explore further: Study finds law dramatically curbing need for speed

add to favorites email to friend print save as pdf

Related Stories

Consumers and commercials studied

Jun 20, 2006

U.S. scientists say the more consumers are absorbed in the narrative flow of a story, called transportation, the less likely they'll respond well to ads.

TiVo DVR viewers bypassing 10 p.m. slots

Apr 15, 2009

New research indicates viewers who use digital video recorders to watch their favorite broadcast TV shows tend to watch shows recorded between 8 p.m. and 10 p.m. -- and many of them appear to be skipping 10 p.m. telecasts ...

DVR fast-forwarding may not be fatal to TV advertising

Nov 03, 2008

While digital video recorders and products like TiVo allow television viewers to skip past commercials, Boston College researchers have found that fast-forwarding viewers actually pay more attention and can ...

Google's Thriving Advertising Model Has Math Roots

May 23, 2005

Computer Scientists Optimize Online Ad Auction A 30-second prime-time television spot was once considered to be the most effective form of advertising, but search engine ads are replacing it. This year, predicts Advertising ...

Hi-tech tunnels ads, an alternative to TV

Apr 10, 2006

Imagine watching a man being pulled by a team of dogs as you travel in a metro train under the streets of Washington, D.C. That's what the Travel Channel hopes when metro riders see its new 15-second motion-picturesque advertising ...

Banner ads work -- Even if you don't notice them at all

May 10, 2007

The majority of advertising exposure occurs when the audience’s attention is focused elsewhere, such as while flipping through a magazine or browsing a web site. However, a new study reveals that even this incidental exposure ...

Recommended for you

Study finds law dramatically curbing need for speed

Apr 18, 2014

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...

Newlyweds, be careful what you wish for

Apr 17, 2014

A statistical analysis of the gift "fulfillments" at several hundred online wedding gift registries suggests that wedding guests are caught between a rock and a hard place when it comes to buying an appropriate gift for the ...

Can new understanding avert tragedy?

Apr 17, 2014

As a boy growing up in Syracuse, NY, Sol Hsiang ran an experiment for a school project testing whether plants grow better sprinkled with water vs orange juice. Today, 20 years later, he applies complex statistical ...

Creative activities outside work can improve job performance

Apr 16, 2014

Employees who pursue creative activities outside of work may find that these activities boost their performance on the job, according to a new study by San Francisco State University organizational psychologist Kevin Eschleman ...

User comments : 4

Adjust slider to filter visible comments by rank

Display comments: newest first

ScooterG
3 / 5 (2) Jun 23, 2009
Nothing in this universe has been studied more than the American consumer - as long as we're a capitalist society, there's no reason to believe this will ever change.
Doug_Huffman
not rated yet Jun 24, 2009
Well that's about to end, 'Capitalist society'. Obongo will take care of what remains after The Deliberate Dumbing Down of America (by Charlotte Thomson Iserbyt).

Abuse of outlier consumers drove me away from TV.
VOR
5 / 5 (1) Jun 24, 2009
I find all commercials, and the fact that they occupy at least a full 1/3 of the airtime, completely intrusive and offensive. Im suprised that people tolerate being forced to sit through them for such a huge percentage of the program.I skip all commercials. I find it especially offensive that I pay the cable company to recieve them. On me, the model does not just need tweaking, it's completely broken. The only way I would actually watch commercials is if doing so would dramatically lower my cable bill, and I could pick just the areas I was interested in. I am growing intolerant of imbedded webcast commercials. If they grow any longer or more frequent I will stop watching that programming altogether since I havn't (yet) figured out a convenient way to skip them. When reading a magazine, you can turn the page, that model works. But when watching, you are help captive. its a load.
ZenaV
not rated yet Jun 26, 2009
I LUV it! I don't ever watch or hear ANYMORE T.V. since they changed them to a nasty way of trying to sell the new hookups for t.v.s. They are GONE from me-hahahahahahahahahahahahahahaha.....I am FREEE from commericials. :))

More news stories

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...

NASA's space station Robonaut finally getting legs

Robonaut, the first out-of-this-world humanoid, is finally getting its space legs. For three years, Robonaut has had to manage from the waist up. This new pair of legs means the experimental robot—now stuck ...

Ex-Apple chief plans mobile phone for India

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Filipino tests negative for Middle East virus

A Filipino nurse who tested positive for the Middle East virus has been found free of infection in a subsequent examination after he returned home, Philippine health officials said Saturday.

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.