Star Digital: Assessing the Effectivness of Display Advertising

Star Digital, a multichannel video service provider with over US$100 million in annual advertising spends, was gradually increasing its online advertising spend. The company was extremely active in managing its substantial advertising budget, using return on investment information to make spending decisions. Even though the internet provided a promising platform to measure ad effectiveness, doing so for display ads was proving difficult. The two common approaches to measuring display ad effectiveness tended to either under or over value conversion rates. To truly measure the effect on sales conversion, Star Digital needed to understand what users would have done if they had not seen campaign ads. To do so, Star Digital designed a controlled experiment to measure the effect of display ads for one of its advertising campaigns. This case describes Star Digital's experiment, focusing on the experiment design and how the company addressed various design issues. The case includes an Excel spreadsheet that contains sample data from the experiment. Students need to analyze the spreadsheet data to answer questions on the effectiveness of Star Digital's display ads. This case study is based on data from an online advertising study for a real firm, but the name of the firm and some elements of the data have been disguised for confidentiality.