Assessing the Effectiveness of Targeted Advertising among Internet Social Network Users - Research Proposal Example

Running head: SOCIAL NETWORK ADVERTISING Assessing the Effectiveness of Targeted Advertising among Internet Social Network Users {Name} {Course/University} Word Count: 2,543 1. Objectives of the Study The overall objective of this proposed study is to assess the effectiveness of targeted Internet advertising among a particular group of Internet users, specifically students between the ages of 18 and 24 who are members of one or more social network sites such as Facebook or MySpace. In doing so, this study will test the assertions of other studies that have found Internet advertising to be relatively ineffective, despite the enormous amount of money – estimated to be above eight billion dollars annually (Manchanda, et al., 2003, Yongmin & Chuan, 2006, Einhorn, 2007, and Ghose & Sha, 2007) – spent by advertisers each year. The metric which is most often cited to measure Internet advertising effectiveness is the ‘click-through’, and this rate is estimated to be about 0.5% (Manchanda, et al., 2003), meaning that for every 1,000 viewers of an advertisement only five will ‘click’ it to view the associated commercial site. To compensate for this dismally low rate of penetration, advertisers have turned to ‘targeted’ advertising such as search-term related ads and targeted social network ads to reach a more relevant and interested audience. This study will add to the existing body of research by examining in close detail specific forms of Internet advertising – targeted, personalised advertising through the media of social networking sites – which have not been researched in-depth until now. It will have both objective and subjective measures that are attainable through primary and secondary research. Objective measures to be obtained through primary research consisting of a survey of Internet users include Internet usage in terms of units of time per time period, number of visits per time period to particular social network sites, number of times in a given period observing/clicking advertisements, and number of times within a given period using Internet to make purchases. Subjective measures include recall of ads, general impressions and feelings towards specific aspects of ads. In order to ensure the relevance of these primary research results, a survey group large enough to be statistically significant will be sampled. In order to successfully complete this study, time must be allotted for secondary research to prepare for the primary research survey, conducting and analysing the primary research, and follow-up secondary research to compare the results with prior studies and Internet advertising statistics and place the research outcome in context. An anticipated timeframe is provided by the Gantt Table in Part 8. 2. Theoretical Background and Framework It should be noted that the objective of this study is not to conduct a detailed examination of the information technology employed in targeted advertising, nor in Internet advertising in general. Because the Internet and social networks are the media by which the advertising is delivered, some discussion of the technology is necessary for a clear understanding of how it is used. The focus, however, will be on the content of and responses to the advertising, rather than its method of delivery; therefore the theoretical background and framework of the study will be rooted in theories of advertising, most of which predate the Internet age, rather than information technology. There are two theoretical frameworks which will guide this study. The first is Consumer Involvement Theory, which describes advertising in terms of high or low consumer involvement on either rational or emotional terms (Zwick & Dholakia, 2006). This provides a clear set of four different levels in which to classify the responses to the types of advertising that will be examined in the study: high involvement/rational choice, high involvement/emotional choice, low involvement/rational choice, and low involvement/emotional choice. Consumer Involvement Theory is only half of the puzzle, however. The ways in which the advertising message is modified to elicit the desired response described by Consumer Involvement Theory are further described by Adaptive Structuration Theory, first proposed by DeSanctis and Poole (1994) as an extension of the Structuration Theory described by Giddens (1984), and clarified in detail by Pavlou and Stewart (2000): “Application of structuration theory to interactive advertising would involve the identification of the ways in which consumers shape the production, reproduction, and transformation of the advertising message, future products and services and relationships with marketers and other consumers. This interaction can, in turn, shape the actions taken by advertisers.” (Pavlou and Stewart, “Measuring the Effects and Effectiveness of Interactive Advertising: A Research Agenda”, Journal of Interactive Advertising, Fall 2000) This theoretical framework, along with Consumer Involvement Theory, will the bases upon which the hypothesis that in order to overcome a natural resistance to advertising by Internet users, advertisers turn to increasingly personalised and targeted means to attract attention. The effectiveness of these efforts will be assessed by this study’s primary research. 3. Sector/Organisational Focus The primary research will focus on users of the social networking sites Facebook and MySpace. Other social networking sites such as Friendster and Xanga, and search engines such as Google and Yahoo, will be examined for comparative purposes. The users who will be surveyed in the primary research will be drawn from the student body of the university; it may also be advantageous to conduct some of the research using the functions of the social networking sites, such as distributing the survey through local participants’ networks. Further consultation and preliminary research will be necessary to determine whether extending the survey through the social networks is advisable. Secondary research to gather data on Internet advertisements, such as page views, “clicks”, and frequencies of selected types of advertisements will be conducted by contacting the administrators of Facebook, MySpace, Google, and Yahoo. If necessary, advertising agencies responsible for the production of the advertisements or the advertisers themselves will be contacted to obtain additional statistical data. It is anticipated that the data will be obtainable, but that conditions of strict confidentiality and use of the data will be required; this has been the norm encountered by other researchers conducting similar types of studies (Manchanda, et al., 2003, and Trusov, Buckland, and Pauwels, 2008). 4. Key Literature and Prior Research Even though targeted advertising through social networks is a relatively recent development, some research into this specific area has already been done. Pavlou and Stewart (2000) proposed a theoretical framework for interactive advertising, and their ideas will be of great importance to this study. Trusov, Bucklin, and Pauwels (2008) conducted a study of the effectiveness of word-of-mouth advertising versus traditional advertising methods related to the promotion of a social networking site. While this study addressed promotion of the site itself rather than products advertised within the site, it is relevant in detailing the mechanics of user-linked advertising efforts. Manchanda, Dubé, Khim, and Chintagunta (2003 & 2006) extensively studied the uses and effects of banner advertising on Internet sites, first in terms of customer retention (2003), and in relation to the effects on purchasing habits of Internet shoppers (2006). Key legal and privacy issues raised by the use of various forms of targeted Internet advertising are discussed in detail by McGeveran (2004), Deutsch (2005), and Zarsky (2006). These studies are important not only because they give some context to how people react to targeted advertising, but also serve as reminders of important legal and ethical considerations that must be made in the course of conducting research for this study. And finally, Joachim Tåg of the Swedish School of Economics authored a paper in May 2007 entitled “Paying to Remove Advertisements”, which is an enlightening study of the business model created by giving users the option to pay to block advertising from being shown on sites they frequent. This research is significant because it addresses how user reactions can be turned into additional revenue streams for Internet advertisers and site hosts, and raises further questions about the applications of targeted advertising. 5. Ontological and Epistemological Position The perspective from which this study will be conducted can be best described by the assumptions it will make: Internet exposure and usage is practically universal, and well-understood by most people. Therefore, the Internet may be regarded as a common medium, in which the use and effects of advertising vary according to the content and format of the advertising rather than the technological aspects of the medium. In other words, judgments about various types of Internet advertising are arrived at in the same way that judgments about advertising in other media are formed, for example television commercials. Internet usage, and specifically participation in social network sites such as Facebook and MySpace, is widespread among the demographic chosen for this study, students aged 18 to 24. A survey comprised of mostly objective questions is the best method of primary research for this study because it will obtain a large sample of quantifiable data to which statistical methods can be applied to arrive at valid and significant conclusions. The validity of the survey results can be compared and confirmed, at least in part, by data obtained from Internet advertising hosting and monitoring agencies. This research paradigm is preferred for several reasons. Both the survey method and the analysis of actual usage data – which is recorded in the form of “cookies”, small trace programs that track website visits (Manchanda, et al., 2003) – have been used by numerous other studies, in particular the significant studies detailed in the preceding section. Since the aim of this study is, in part, to test the conclusions reached by similar research, it is necessary to employ the same methods. This effort may indeed reveal shortcomings in the research that has been done to date, and suggest new methodological approaches. Those would, however, be appropriate for future research, and alternative approaches to the one described here would be less effective for this study. 6. Analysis of the Findings The results that are anticipated will be relatively uncomplicated. Objective data from the primary research (survey) and secondary research (data collection from websites and advertising sources, and literature review) can be expressed in simple numerical terms. Further analytical methods will be required, however, in order to properly develop conclusions and present findings, particularly since there will be a component of subjective responses from survey participants to be considered. The specific methods to be used will be determined by the specific questions and the size of the sample group, but it is expected that methods used by other similar research will be appropriate. These include: Hierarchical Bayesian Framework (Manchanda, et al., 2003): In their study of banner advertising, Manchanda, Dubé, Khim, and Chintagunta applied this methodology to account for individual differences in users’ exposures to advertising. Their model focuses on the purchase decisions initiated by an exposure or repeated exposures to banner advertising by consumers on a per-week basis. These decisions are functions of the time interval since the customer’s last purchase, marketing and behavioral variables, and other unobserved heterogeneous factors (Manchanda, et al., 2003: 10). Examples of these differences included number of web pages viewed, and the number of advertisements on different pages. This methodology is very appropriate for this study, because of the variables in users’ activity within social networking sites, such as membership in different groups within the network. Vector Autoregression (Trusov, Bucklin, and Pauwels, 2008): This study of “word-of-mouth” referrals as a tool to elicit users to join a social network found a number of linked causalities. In other words, the effectiveness of word-of-mouth referrals is endogenous; referrals lead to new member sign-ups, which in turn lead to more referrals. In addition, the study also had to consider the effects of other ‘traditional’ marketing activity apart from word-of-mouth referrals in gaining new members for the network, as well as the effects of this other marketing activity on the number of word-of-mouth referrals generated (Trusov, Bucklin, and Pauwels, 2008:14). In a study in which the subject is both endogenous and indirectly affected by outside factors, a vector autoregression approach is appropriate for determining valid empirical results. The application to this study is obvious, in that the nature of targeted advertising is to access users’ connections to other users. These are naturally two-way communications, and are thus endogenous. In addition to these methods, it is anticipated that because of the inclusion of some subjective data it may be necessary to apply Exploratory Data Analysis techniques to determine relationships and effects between variables presented by the survey responses (StatSoft, 2008). A comprehensive review of the analytical methods described above as well as others that might be applicable to this study will be undertaken in preparation for the data analyses. 7. Ethical Issues Ethical considerations about targeted advertising are fundamental to any study of the phenomenon. The issues of privacy and other ethical problems connected with Internet advertising have been studied by Krishnamurthy (2000), Deutsch (2005), Zarsky (2006), Devine (2008), Cannon (2008), Wilbur and Yi (2008), and McGeveran (2009). Becker and Murphy (1993) undertook a study of advertising in general to define it in terms of “good” and “bad”, research based in large part on people’s perceptions of advertising’s intrusiveness. These prior studies are an important reminder of the need to observe strict confidentiality and non-disclosure of any personal information obtained from survey participants. As much as possible, the survey will be designed to minimise the need for participants to reveal any private information. Additionally, market data and other advertising statistics obtained from Internet advertising agencies is likely to be considered proprietary, as Manchanda, et al., (2003) and Trusov, Buckland, and Pauwels (2008) found in conducting their studies. Any confidentiality requirements demanded by the companies contacted for the purposes of this study will be strictly observed. Maintaining confidentiality in all aspects of data collection will also help to avoid selection and response bias in the primary research. 8. Time Frame The basic Gantt chart below illustrates the basic schedule for this study. Much of the secondary research can be done concurrently with other parts of the project, but there are a couple key dependencies that should be noted. The literature review will need to be completed before the administration of the survey can begin. The beginning of the survey is not necessarily dependent on all revisions to it being completed, as it is expected that one function of testing the validity of the survey will be to give it to a small initial group. And of course the survey must be completed before the final analysis and confirmation of the data, and the production of the final dissertation. The Gantt chart was developed using a simple tool available at the website www.helpuplan.com, and will be updated as the study progresses and specific timeframes become clearer. 9. Resources Needed Apart from access to the materials listed in the References and reliable access to the Internet, additional resources for the completion of this study should be minimal. Fees of up to € 20 may be required for additional publications that may need to be retrieved from databases such as Emerald and SSRN; many materials are available free of charge, but some are not. 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