Mobile Ads: What Works, and What Doesn’t

Mobile ads are a great way to reach today’s on-the-go consumer, but some mobile ads are more effective than others.

Despite their smaller size, mobile display ads — tiny banner ads that pop up in a smartphone’s Web browser — can have a big effect on consumers who are in the market for certain types of products, according to a Columbia Business School study. Specifically, the researchers discovered the following:

Mobile ads work well for products that have a practical and important use, like a lawn mower or a washing machine.
Mobile ads work well for high-involvement products, such as those where a lot of time, thought and energy are placed into the decision — for example,buying a car.
Mobile ads don’t work for just-for-pleasure items, like fancy watches.
Mobile ads don’t work for low-involvement purchases, like movie tickets or toothbrushes. These are purchases that pose a low risk to the buyer.
Miklos Sarvary, co-director of Columbia Business School’s media program and co-author of the study, said too many marketers are using a “spray and pray” approach to digital ads.

“They’re just putting mobile ads out there and hoping that they work,” Sarvary said in a statement. “Limitations in tracking smartphone ads have always made it difficult for marketers to track and optimize their return on investment, but we’ve unlocked a part of that mystery now, which means they’ll know how to best to spend their dollars.”

For the study, researchers looked specifically at the effects of mobile display ads (MDAs) viewed on a variety of mobile devices, including smartphones. They studied survey data from nearly 40,000 American consumers about their reactions to MDAs.

More than 50 products — ranging from consumer packaged goods to cars to financial services — were represented in the ads. After viewing one of the ads on a mobile device, participants completed a survey that assessed their attitude toward and intention of buying the product.

To determine what kind of products are best served by mobile display ads, the researchers classified each product as either “utilitarian,” which means it serves a useful purpose, or “hedonic,” which refers to products typically bought just for pleasure, like movie tickets or a fancy new watch.

Sarvary thinks the study’s results are rooted in psychology. Before making a big purchase, he said, people tend to do a lot of rational thinking, by comparing one product to another and weighing their options.

Sarvary said this rational thinking, which can go on for several weeks, is magnified even more if the product being purchased isn’t just for entertainment — for example, a new big-screen TV — but one that serves a more useful purpose, like a new family car.

“If a display ad for that car shows up on your smartphone — even if it’s tiny and doesn’t provide you with new information — it’ll reinforce what you already know about the product,” Sarvary said. “The mobile ad’s strength is not adding new data, but reminding you of what you already know and making you think about the product again.”

The study’s authors believe their findings carry huge implications for marketers who are planning a multichannel campaign for a product. Sarvary said that, rather than sticking with a “spray and pray” approach, companies might find that it’s more effective to launch mobile display ads after a product has been advertised in other media.

“That way, the banner ad seals the deal,” he said.

The study was co-authored by Andrew Stephen, an assistant professor of business administration at Columbia Business School, and Yakov Bart, an assistant professor of marketing at INSEAD.