September 21, 2005

Today, every Internet advertiser and marketer knows that the site where you run your Internet ads is a very important media decision. However, recent marketing research shows that the hour of the day (or night) when you run them may be as critical.

The "Online Media Conversion Rates by Daypart" study, from the Atlas Institute, found that potential customers who are exposed to display ads online during the workday and early evening are more likely to make a purchase, fill out registrations or convert than consumers who view the ads between midnight and dawn.

"Time of day can have a dramatic impact on a campaign as hourly conversion rates can vary as much as 50% from the overall average," said Young-Bean Song of Atlas.

"The results of this study indicate that web users save their purchases and other activities (typically tracked as conversions by marketers) for the lunch hour, after dinner or before going to bed."

In a report released earlier this year, The Media Audit said that the period from 1 pm to 6 pm was the most popular daypart among online shoppers who had made 12 or purchases over the past 12 months.

Atlas's research analysts, who studied conversion rates for each hour of the day, found that the lunchtime and prime time hours were the best dayparts for conversion rates.

The noon hour (Eastern time) showed the highest conversion rate, at 35% more than the overall average. The 4 a.m. hour had the lowest rate, converting at less than half of the day's mean rate, while the morning, in general, showed the least activity.

"This is a clear indicator for direct response marketers that daypart advertising can play a key role in realizing savings in costs-per-acquisition deals," said Mr. Song.

The study offers several learning points for marketers.

Most importantly, given the large dips in conversion rates seen during the early morning, it may be a good idea — particularly for direct response advertisers — to avoid delivering impressions during that time.

Targeting impressions to other hours, such as the late evening and lunch hour, could realize savings in cost-per-acquisition (CPA) by delivering more effective impressions that generate more conversions.

However, there are several other key factors to take into account when choosing dayparts:

Keep in mind that if a daypart media buy is significantly more expensive than regular media, it may offset the potential gain in acquisition costs.

As a general rule, paying more than a 35% surcharge for daypart buys will negate any gain in efficiency and should be avoided.

Although early morning hours display a poor conversion rate, they still account for about 10% of the overall conversion volume.

Simply cutting out these hours will increase efficiency and raise conversion rates, but will also sacrifice conversion volumes.

Advertisers can try to increase impression volumes to more effective times of day; however, they may reach some point of diminishing return due to increasing impression frequency.

Savings will only be realized for advertisers that have contracted CPM deals with their publishers. CPA and CPC deals need not worry about daypart, since they are negotiated on a pay-for-performance basis, irrespective of hour.

Source: eMarketer