Morphing Banner Advertisement

Group 9 | H. K., W. C., M. G.-P.

Electronic Commerce | 26.11.2014

2

AGENDAMorphing Banner Advertisement

Background

Current challenge | Overview of online advertisement | Progress in banner advertisement

Morphing

Cognitive dimensions | Banner morphing process | In-class activity | Business application

Discussion

Benefits and risks of big data integration | Power to the users?

3

Background | Current ChallengeClick-through rates

Of 200 website visitors ..

.. one will click a banner ad.

Source: Urban, Hauser et al, 2014

4

Background | Overview of online advertisementGrowth

...

...

...

...

...

...

5

Article: New

Car Trends

2014The Vision G-Code

is as striking as

any concept, with a

squat profile and

space-age interior,

but it's not the

car's looks that are

interesting here:

it's the paint.

Background | Progress in banner advertisementContext-matched, cognitive-matched ads

Article: New

Car Trends

2014The Vision G-Code

is as striking as

any concept, with a

squat profile and

space-age interior,

but it's not the

car's looks that are

interesting here:

it's the paint.

Article: New

Car Trends

2014The Vision G-Code

is as striking as

any concept, with a

squat profile and

space-age interior,

but it's not the

car's looks that are

interesting here:

it's the paint.

Non-context

Non-personal

ads

Context-matched

Non-personal

ads

Context-matched

Cognitive-matched

ads

Data use,

Ad effectiveness

6

Morphing | Cognitive dimensionsWhat are cognitive styles?

Cognitive styles include how we perceive, think and solve

problems and have a high degree of persistence across

various decision situations.

Source: Urban, Hauser et al, 2009 (II)

7

Morphing | Cognitive dimensionsImpulsive vs. deliberative

.

...

...

...

Baseball bat costs $10 more than the ball.

Question: What’s the price of the ball?

Source: Urban, Hauser et al, 2009 (I)

$11 $??

8

Morphing | Cognitive dimensionsHolistic vs. analytical

Question: Which group is more similar to the target object?

Source: Norenzayan et al, 2002

9

Morphing | Cognitive dimensionsSegmentation

impuls

ive

delib

era

tive

holistic

analytic

impulsive -

holistic

deliberative -

holistic

impulsive -

analytic

deliberative -

analytic

10

End

Morphing | Banner morphing processTechnical backbone

Source: Urban, Hauser et al, 2009 (II)

Pages served

Bayesian Inference Engine

Gittins’ Updating System

Start

Visitor enters

siteVisitor leaves

siteVisitor’s click-stream

Engine infers visitor’s

cognitive style

System

updated

based on

new data

(click on ad

vs. no click)

System

serves

optimal

morph

learned from

past users

Mo

rph

ing

ba

nn

er

Alg

orith

m o

ptim

iza

tion

11

Morphing | Banner morphing processResults

Banner morphing is effective when context-matched.

Source: Urban, Hauser et al, 2014

12

Morphing | Banner morphing processResults

Banner morphing lifts brand recognition and purchase likelihood.

Source: Urban, Hauser et al, 2014

13

Morphing | In-class activityOverview

Scenario

Linda and Tom are planning to replace their current phones and search for information on

CNET.com (“The world's leader in tech product reviews [..] and more”).

Based on received information, CNET wants to display a banner ad for a new smartphone

and hopes to potentially match Linda’s/Tom’s cognitive style.

Task (10 minutes, work in groups of 2-3)

1. Which cognitive-style segment describes Linda/Tom best?

2. Which banner should CNET display? Why?

14

Morphing | In-class activityResources

Cognitive styles

Deliberative: explores options in depth before making a decision

Impulsive: makes decisions quickly

Analytic: detail oriented, studies each component of the problem

Holistic: sees the big picture

15

Morphing | In-class activityResults

16

Morphing | Business applicationTrbo.com

Source: trbo.com

17

Morphing | Business applicationTrbo.com

Source: trbo.com

“We use big data to create personalized shopping incentives.”

18

Discussion

Why isn’t everybody using morphing?

19

Discussion

Do benefits outweigh the risks of big data integration?

20

Discussion | Power to the users?Opt-in solutions

Source: store.nike.com

21

Discussion | Power to the users?Opt-in solutions

Source: urbanoutfitters.com

22

Discussion | Power to the users?Opt-in solutions

Source: heise.de

23

LITERATUREKey references

Urban, G., Hauser, J. et al 2014. Morphing Banner Advertising. Marketing Science, Vol. 33, No. 1, p.

27-46.

Urban, G., Hauser, J. et al 2009. Does Matching Website Characteristics to Cognitive Styles

Increase Online Sales? MIT Sloan School of Management Paper. [(I)]

Urban, G., Hauser, J. et al 2009. Morph the Web to Build Empathy, Trust and Sales. MIT Sloan

Management Review, Vol. 50, No. 4, p. 53-61. [(II)]

Norenzayan, A. et al 2002. Cultural preferences for formal versus intuitive reasoning. Cognitive

Science, Vol. 26, p. 653-684.