Analysing in-feed digital ad performance on social media platforms

If, for example, you log into Twitter (now known as X) and open the ‘Following’ tab, you will encounter posts from the sources you have subscribed to. Or if you open the ‘For You’ tab, you will see content recommended by AI algorithms, based on what AI predicts you are interested in viewing.

These different methods of delivering content provide distinct contexts for in-feed ads. However, little is known about how the performance of in-feed ads compares between subscription and AI-recommendation channels.

Researchers from Lehigh University in the US, the University of Hong Kong, and Wuhan University in China have published an article in the American Marketing Association’s peer-reviewed Journal of Marketing that examines in-feed advertising’s performance across subscription, versus AI-recommended, news feeds.

The way content is delivered (through subscription or recommendation) has a big impact on how customers engage with that content. This, in turn, can determine whether they view in-feed ads as intrusive, and if they decide to click on the ads and make purchases.

Subscription and recommendation channels have two key differences

“We find that subscription and recommendation channels have two key differences: source credibility and content control,” the researchers explain.

“Subscription channels have greater source credibility and more content control because consumers can actively choose their sources, motivating them to exert greater cognitive effort in processing content. 

“In contrast, AI-recommended content may be perceived as less credible and reliance on algorithms reduces consumers’ motivation to exert cognitive effort, leading to lower engagement.” 

In the subscription channel, high customer engagement with the organic content makes readers more goal-oriented, and they thus end up perceiving ads as more annoying and interruptive. 

However, customers who do click on an ad, despite the annoyance, show stronger interest and a higher conversion rate. 

By contrast, in the recommendation channel, customers are in an exploratory state and thus perceive ads as less intrusive. Consequently, customers are more inclined to click on ads in the recommendation channel.

The study offers key lessons for Chief Marketing Officers: 

• If the goal is to convert ads to sales, companies should strive for high conversion rates. Conversely, if the goal is to drive traffic and generate interest, companies should strive for high click-through rates.

• If the advertisers’ goal is to maximise click-through rates, the optimal strategy is to release emotional ads with indirect links for both the subscription channel and the recommendation channel. Conversely, if advertisers want to maximise conversion rates, informational ads with indirect links work best for the subscription channel, while emotional ads with indirect links are the best for the recommendation channel.  

• For recommendation channels, informational ads with direct links have the largest increase in click-through rates and the largest decrease in conversion rates. By contrast, emotional ads with indirect links have the largest decrease in click-through rates and the largest increase in conversion rates.

You can find out more about the research here.