To be clear: Ambiguity in multi-modal digital ads can be a double-edged sword

Jochen Hartmann (Technical University of Munich, jochen.hartmann@tum.de)

with Shunyuan Zhang (Harvard Business School) and Oded Netzer (Columbia Business School)

It is very common for ads to be ambiguous about the brand or even the product category.
Particularly for display online ads that include only an image and a brief tagline, consumers often cannot tell
which product is being sold. On the one hand, ambiguous ads can increase consumers’ curiosity and their
desire for ambiguity relief by clicking on the ad, but on the other hand, such ads may raise false expectations.
Some companies may even use ambiguity to lure consumers into the purchase funnel.

In this research, we explore the effect of digital ambiguous ads on consumers’ behavior throughout
the purchase funnel. For this purpose, we take a multi-modal perspective on ambiguity, considering both the
display ad’s visual banner and its textual caption. We collaborate with a display ad platform, analyzing
consumers’ click-through rates (CTRs) and conversions for tens of thousands of cross-category digital ads. A
unique aspect of our dataset is that it often provides a quasi-experimental setting to study ambiguity where
the same advertiser, uses either the same image with different taglines or the same tagline with multiple
creatives, often varying on their level of ambiguity.

To operationalize ambiguity, we draw on recent advances in transfer learning and train two custom
deep learning-based ambiguity prediction models. To the best of our knowledge, this is the first attempt to
build a scalable model to predict multi-modal product ambiguity.

First, we explore the aggregate effects of ambiguity, where both the banner ad and the caption are
unclear. We find that ambiguous ads obtain more clicks than clear ads (clicks/impressions), but conversion
rates (conversions/clicks) are lower. Our findings suggest that the net effect is negative
(conversions/impressions), meaning that the additional clicks generated by higher ambiguity do not offset
the resulting lower conversion rates. Hence, firms that use only CTRs to optimize their advertising creatives
may overvalue ambiguity.

What is more, ambiguity turns out to be even more harmful in conjunction with promotive captions
(e.g., “Save 10$ on the best gift you’ll ever buy!”), as it significantly lowers the CTR and end-to-end
conversion rate (conversions/impressions) of ambiguous ads. Lastly, we disentangle the visual and textual
ambiguity effects, providing actionable heatmaps to advertisers. Overall, our findings suggest that advertisers
and scholars are well-advised to assess images and texts together rather than individually, and use ambiguity
with care.