Ultramercials: The Perception of Control

If one were to compile a list of marketers’ primary concerns, how consumers respond to their ads is certain to be near the top. Roundtable discussions and focus groups are routinely organized in an attempt to foretell audience reaction. First-round ad performance data is treated as gold.

One Internet ad technology company recently made an important discovery as far as consumer perception of online ads is concerned. The data suggests a parallel that could change online advertising, and publishing, in the years to come.

Ultramercial is the rich media ad-serving company behind the full-screen “e-mercials” that run on Salon.com. Since November 2002, the subscription-based online magazine has offered site visitors a choice: a paid subscription for ad-free access to all content or a “Free Day Pass” in exchange for viewing an Ultramercial ad to completion before being able to access premium content.

Data Ultramercial has been compiling reveals consumers aren’t just tolerating the ads but responding positively — to an astonishing degree. In Q1 2004, 80.53 percent of Internet users across all sites working with Ultramercial watched the ads to completion; 5.22 percent clicked through to the advertisers’ sites. According to Ultramercial COO Peter Lloyd, about 85 percent of this data comes from Salon.

Salon has not only benefited from positive user response to its Ultramercial ads through sustained revenue from satisfied advertisers, but it’s also experienced an interesting offshoot of this success. Since introducing its Free Day Pass, subscriptions have actually gone up. Lloyd and Salon attribute this to consumers’ ability to circumvent the fee barrier and judge the value of the content before spending. The quality of Salon’s content is paying off.

It’s long been believed consumers aren’t eager to acknowledge a correlation between free online content and advertising. They’re all for quality content for free but aren’t nearly as enthusiastic about the ads that underwrite this luxury.

The above data suggests growing consumer understanding of this basic system. It also indicates consumers have a very different attitude toward advertising when there’s a direct benefit involved. It’s easy to forget the function and purpose of online ads when you’re bombarded on a daily basis. Users are more likely to appreciate advertising when they anticipate it and have consented to its presence. This is perceived control.

“What we are able to detect from our viewer behavior and database is that there seems to be an entirely different mindset towards the advertiser when the viewer is receiving a direct benefit at the advertiser’s expense,” says Lloyd, “added perhaps to the fact that the viewer ‘chooses’ to watch the ad.”

NewsStand is one Salon advertiser that’s experienced results of this “different mindset” firsthand. The distributor of electronic editions of dozens of print publications, including The New York Times, The Boston Globe, and Canada’s Globe and Mail, ran two promotional campaigns on the site earlier this year. Its Flash ad featured four frames that quizzed viewers on the product benefits before providing links to both NewsStand.com and a sample of available electronic publications.

Michele Chaboudy, CMO with NewsStand, points out the ad performed best at the start of the campaign when it was new to Day Pass users. Still, she was happy with the results. Ninety percent of users completed the quiz, while 12 percent clicked through from the final frame. Around 10 percent of those made a purchase. “It’s really a well-designed advertising model,” says Chaboudy.

Just how to approach paid content has long been a point of contention among online publishers. Many fear the effect a shift to this paradigm could have on user loyalty.

Perhaps a fee-and-free-based system is the answer. It’s certainly working for Salon’s advertisers.