JANUARY 20, 2015

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Annoying Digital Ads Could Hurt User Retention and Engagement

As we have all experienced, some online display ads can be quite annoying. While annoying ads help catch a user’s attention and generate revenue for publishers, they might also lead users to abandon the site prematurely. A new study published in the Journal of Marketing Research tried to quantify the cost of annoying ads. In the study, participants were asked to read online texts on pages with advertisements, and classify the texts into various categories. When the ads were annoying (e.g. too much animation, poorly designed, looked like a scam), participants needed more time to complete the task, abandoned it more quickly, and had a harder time remembering what they had read. The researchers suggest that when publishers run annoying ads, their users are more likely to have lower engagement while on the sites, and abandon them earlier than they otherwise would. This in turn could lead not only to higher user attrition, but also to a financial cost due to fewer impressions and a lower interaction rate with the ads.

So what?

This study further supports that ad quality is not only important for an advertiser, but can impact user retention on the site. While the majority of ads on Condé Nast sites do not fall into the annoying category, it is critical for publishers to continually think about ad quality and weigh the short-term gains against the potential long-term effects on user retention and revenue.

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Social Media
Pew Research Center: Facebook Still King -- Platform Reaches Nearly Three-Quarters of U.S. Internet Users

According to a new report from the Pew Research Center, four in five American adults who use the internet use one or more social media platforms. Use of multiple social media accounts is growing as 52% of adults now use two or more social media platforms, up from 42% who had multiple accounts in 2013. Here are some usage statistics for the top four social media sites:

• Facebook: 71% of U.S. adults have an account. Daily usage is high with 70% of users logging on daily and 45% logging on several times per day.

• Pinterest: 28% of adults are pinning, including 43% of women and 19% of men. 17% are daily users.

• Instagram: 26% of adults use Instagram and 53% of young adults 18-29 have an account. 49% of Instagrammers use it daily.

• Twitter: 23% of adults are on Twitter -- an increase over last year. However, the frequency among users has declined, as 36% of Twitter users used the site daily in 2014, compared to 46% in 2013.

So what?

Pew's report provides a useful update on the unique demographic profiles of the major social networks, but most importantly it reminds us of Facebook's unmatched reach. While other sites like Instagram and Pinterest continue to grow and serve as effective brand-building tools, Facebook remains the best way to reach the most people. 

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Automotive Category Shows Significant Growth for Second Consecutive Year

New vehicle sales in the United States in 2014 hit their highest level since 2006 (and before the recession), as 16.5 million light vehicles were purchased according to figures released from Autodata. That represented a gain of 6% over new car sales in 2013 and a gain of more than 14% over 2012. Americans continue to gravitate toward light trucks as 8.6 million were sold compared to 7.9 million passenger cars. As was the case in 2013, new vehicle sales peaked in August of 2014. Subaru (new vehicle sales up 21% versus 2013) Chrysler (+16%), Audi (+15%) Nissan (+11%), Porsche (+11%), BMW (+10%), Mazda (+8%), Kia (+8%) and Mercedes-Benz (+7%) all outpaced the category-level growth.

So what?

Some analysts are warning that 2014 might have been the peak year for automotive as the category was aided by consumer need to replace aging cars and low interest rates for buyers. Only U.S. retailers spend more on advertising than automakers, so it will be important to watch for any signs of sluggishness in 2015. Advertisers that can help carmakers make vehicle ownership feel cool again among Millennials, a segment many expect to further gravitate toward Uber, Lyft and the like in lieu of car ownership, should have better success in what might be a more challenging market.

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Quick Takes
Device Users Moving to Phablets; Phablets Represented 13% of New Device Activations During Week Leading Up to Christmas

Source: Flurry Analytics
Advertisers in the United States Spend More Per Capita than Any Other Country -- An Average of $554 for Every Man, Woman and Child

Source: Zenith Optimedia, DSW, Statista
$1,1 Trillion Spent on Luxury Goods Last Year; Nearly $440 Billion Spent on Luxury Cars

Source: Bain/Altagamma, Bloomberg, The Economist
Condé Nast
Feedback, questions, ideas for future issues? Please contact:

Phil Paparella
Condé Nast Research & Insights | Associate Director
1166 6th Avenue, 14th fl. | NY, NY 10036 | office 212.790.6044 | philip_paparella@condenast.com

Tamar Rimmon | Senior Manager, Digital Analytics
Robyn Hightower | Manager, Research & Insights