• by Kate Kaye , April 6, 2004

Frequency capping isn't just for pop-ups anymore. At least that's what a new study by AQuantive's Atlas DMT suggests. Optimal Frequency: The Impact of Frequency on Conversion Rates measured conversion rates resulting from cost per thousand (CPM) campaigns of 38 advertisers that ran during the second half of 2003. Advertisers that "impose a sensible cap" based on optimal frequency could reduce cost-per-acquisition by 10 percent to 30 percent, according to the study.

Frequency caps limit the number of times a particular ad is served to a specific user, and are employed most regularly for pop-up or rich media campaigns in order to avoid overexposure, which can lead to diminishing returns and user annoyance. Atlas DMT tracked cumulative conversion rates of direct response campaigns, segmenting impressions by the order they were served to users, comparing first impressions, second impressions, and so forth. Participating advertisers represented online retail, travel and leisure, financial services, and subscription advertisers such as online dating sites.

"Ninety percent of publishers say they're doing it," observes Young-Bean Song, the study's co-author, with regard to frequency capping. The director of analytics for Atlas DMT suggests that although publishers rely on frequency caps to ease agitation from pop-ups, they're less likely to use them for placed formats such as skyscrapers or banners. Through the Optimal Frequency study, Atlas purports that limiting the number of times an individual consumer experiences an ad via frequency caps enables advertisers to reach more users with the same amount of ad dollars.

For example, an investor who checks stock quotes multiple times throughout the day may be exposed to the same ad several times daily. "Advertisers are paying the same amount for each impression," Song says, adding: "What kind of impact does that have on sales?"

Based on an aggregate of all campaigns analyzed, the study found that the conversion rate was highest on the first impression served. According to Song, these initial impressions converted at a rate 2.5 times that of the overall campaigns. The first five impressions drove the most actions for the campaigns measured in the study, he adds.

However, the Atlas DMT research cautions advertisers to balance efficiency goals with volume goals, and states that the lowest cost-per-conversion does not necessarily yield the highest number of conversions. The study also reveals that within the travel sector alone, optimal frequency cap levels vary campaign by campaign, depending on demographic targets, media strategies, and other factors.

"The study is a really good demonstration of how you can stretch media return on investment without adding more dollars," comments Gerard Broussard, senior partner and director of media analytics at mOne Worldwide, a unit of WPP Group. Ameritrade, one of the media agency's clients, participated in the study. The online stock trading outfit used historical data to map ad frequency to the number of conversions garnered through a campaign that ran during the fourth quarter of 2003.

MOne found that Ameritrade's ideal frequency cap number was higher than originally anticipated, according to Broussard. In response to the findings, the frequency of the Ameritrade ads was adjusted, which resulted in a 15 percent lift in conversion rates on sites where frequency capping was implemented. Despite the lift and favorable return on investment, Broussard has noticed that "some publishers are reticent to comply with frequency capping."

Frequency capping also means different things to different publishers, Song says. Some cap by visitor session, some by day or week, and others for longer durations. "Quite honestly," he adds, "it's less important to publishers because they're getting paid the same for the hundredth as the first impression." But he believes that could change as more advertisers demand frequency caps for ads other than just pop-ups.

As advertisers pay more attention to the benefits of using frequency caps, Song continues, "publishers will use them as a negotiation tool and charge incremental CPMs. It may be worth paying a 20 percent higher CPM if an advertiser can reallocate impressions to reach new users," he concludes.