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Analysing in-feed digital ad performance on social media platforms

By our News Team | 2023

To maximise conversion rates, informational ads with indirect links are best for subscription channels, but use emotional ads for recommendation channels.

How do you get online news daily? Do you subscribe to topics you are interested in? Or let artificial intelligence algorithms recommend news to you? 

 

Platforms like Google News, Twitter and TikTok offer two distinct ways of curating organic content: through user subscriptions and via AI algorithms.

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Image by Gerd Altmann from Pixabay

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.

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.