The impact of contextual television ads on online conversions: An application in the insurance industry

The use of contextual advertising, defined as the delivery of ads in related editorial contents, is expected to grow in the television industry due to the development of new technologies. However, the impact of this practice on behavioral consumer responses remains elusive. Using data from an online price comparison company, we study the short- and long-term effects of contextual television advertising on consumers' online conversions. We find that contextual ads have a higher immediate effect than non-contextual ads on consumers' responses for the product that is related to the context. However, both effects are similar in the long term. Additionally, our results suggest that the total impact of contextual advertising can be smaller than the net impact of neutral advertising due to a “spillover inhibition effect”: Compared with ads placed in neutral contexts, contextual ads generate fewer online conversions for products that are unrelated to the context. Our findings stress the importance of assessing the long-term impact of contextual advertising on the product portfolio, rather than just on the context-related product. Failing to do so could lead to advertising allocation decisions with lower returns on investment.