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AI recommendation vs. user subscription: Which one’s better?

If the goal is to convert ads to sales, companies should strive for high conversion rates. Conversely, if the goal is to drive traffic and generate interest, companies should strive for high click-through rates.



Researchers from Lehigh University, University of Hong Kong, and Wuhan University published a new Journal of Marketing article that examines in-feed advertising’s performance across subscription versus AI recommended news feeds.

The study, forthcoming in the Journal of Marketing, is titled “Tales of Two Channels: Digital Advertising Performance Between AI Recommendation and User Subscription Channels” and is authored by Beibei Dong, Mengzhou Zhuang, Eric (Er) Fang, and Minxue Huang.

How do you get news on a daily basis? Subscribe to topics you are interested in? Or let artificial intelligence (AI) algorithms recommend news to you? Platforms like Google News, Twitter, and TikTok offer two distinct ways of curating organic content: through user subscriptions and via AI algorithms.

If, for example, you log into Twitter (now known as “X”) and open the “Following” tab, you will encounter posts from the sources you have subscribed to. Or if you open the “For You” tab, you will see content recommended by AI algorithms based on what AI predicts you are interested in viewing.

These different methods of delivering content provide distinct contexts for in-feed ads. However, little is known about how the performance of in-feed ads compares between subscription and AI-recommendation channels.

In-feed ads blend into your news feed, matching the format and style of content while clearly indicating their sponsored status. These ads can take various forms, from text-based ads on Apple News to eye-catching images on Instagram and engaging videos on TikTok. In-feed advertising has seen significant growth, with 58.3% of U.S. digital display spending allocated to these ads in 2018.

The authors explain that “in-feed ads ideally fit seamlessly into the organic content stream and their effectiveness is determined by both the ads’ attributes and where they are placed. We examine how the channel affects ad effectiveness and whether the effects also depend on ad attributes.”

They consider two core digital ad attributes:

  • Ad appeal that describes key content of the ad, which can either be informational (focusing on factual product information) or emotional (emphasizing the product experience through subtle feelings)
  • An ad link that leads to consumer action, which can be direct (e.g., “buy now”) or indirect (e.g., “click for more information”)

Channel Difference and Consumer Engagement

The manner in which content is delivered (through subscription or recommendation) has a big impact on how customers engage with that content. This, in turn, can determine whether they view in-feed ads as intrusive and if they decide to click on the ads and make purchases.

“We find that subscription and recommendation channels have two key differences: source credibility and content control. Subscription channels have greater source credibility and more content control because consumers can actively choose their sources, motivating them to exert greater cognitive effort in processing content. In contrast, AI-recommended content may be perceived as less credible and reliance on algorithms reduces consumers’ motivation to exert cognitive effort, leading to lower engagement,” the researchers claim.

Ad Intrusiveness and Ad Performance

In the subscription channel, high customer engagement with the organic content makes readers more goal-oriented, and they thus end up perceiving ads as more annoying and interruptive. However, customers who do click on an ad, despite the annoyance, show stronger interest and a higher conversion rate. By contrast, in the recommendation channel, customers are in an exploratory state and thus perceive ads as less intrusive. Consequently, customers are more inclined to click on ads in the recommendation channel.

The study uses two ad performance metrics for analysis: click-through rate (CTR), the ratio of clicks to exposures, and the conversion rate (CR), the ratio of purchases to clicks. In the subscription channel, higher ad intrusiveness leads to lower CTRs but higher CRs, while in the recommendation channel, lower ad intrusiveness may generate higher CTRs, but the proportion of genuine interest and subsequent purchases is smaller. “In addressing which channel has better ad performance, we show that the recommendation channel underperforms the subscription channel in converting sales, but excels at eliciting clicks,” says the research team.

Takeaways for CMOs

The study offers key lessons for Chief Marketing Officers:

  • If the goal is to convert ads to sales, companies should strive for high conversion rates. Conversely, if the goal is to drive traffic and generate interest, companies should strive for high click-through rates.
  • If advertisers’ goal is to maximize click-through rates, the optimal strategy is to release emotional ads with indirect links for both the subscription channel and the recommendation channel. Conversely, if advertisers want to maximize conversion rates, informational ads with indirect links work best for the subscription channel while emotional ads with indirect links are the best for the recommendation channel.
  • For recommendation channels, informational ads with direct links have the largest increase in click-through rates and the largest decrease in conversion rates. By contrast, emotional ads with indirect links have the largest decrease in click-through rates and the largest increase in conversion rates.
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5 Tips for small business owners to help grow their business online

Choosing and registering a domain name for your business that’s memorable is increasingly important in an expanding digital marketplace, as it helps to shape your online business identity.



Small businesses are embracing digitalization and catering to their customer needs through a variety of online channels. With new technologies emerging such as artificial intelligence, there is no time like the present to help your small business grow by taking advantage of the online world.

A GoDaddy 2023 global survey examined the status of small businesses including their ways to reach customers and survive in highly competitive markets. APAC countries surveyed, including Philippines, Singapore and Thailand, showed use of a business website, online store, ecommerce or a combination of them ranking at 57% of survey respondents. These results support having a strong online presence with multiple complementary channels can be vital for businesses to thrive and grow in today’s competitive digital environments.

With this in mind, GoDaddy shares five tips to help your small business grow with an online presence.

1. It starts with a domain name

When getting started, check availability of domain names for the desired name. A domain name can be considered a business’ piece of real estate and identity on the internet. It is a way for customers to easily find a business online.

Choosing and registering a domain name for your business that’s memorable is increasingly important in an expanding digital marketplace, as it helps to shape your online business identity. If the .com extension is not available, there are many new extensions available, such as: .shop; .co.; .photography; .tech, to name a few, for you to consider which can help define your business.  After choosing a domain name register it with a reliable hosting provider right away.

2. Build a website 

Websites help create visibility for small businesses and acts as a home base for your business on the internet, even if you have a brick-and-mortar store.  A website can help consumers easily find your business, learn about your product offerings and services, and contact you for more information.

A well-designed professional looking website can offer an engaging customer experience with the use of text along with photo images and video.  Having a website gives you control over the messaging about your business and can serve as a hub by linking with your social media channels.

3. Listen to your customers

The growth of your business is directly related to customer satisfaction. Listen to your customers and pay attention to the needs of your target market. Identify their problems and pain points. How can your offerings act as a solution? Is it possible to develop new products to help solve these problems?  Engage for customer feedback and keep an eye on customer behaviour changes and audience interests.

4. Develop a business support system

By developing a strong business support system, entrepreneurs can benefit from new ideas on ways to address a particular issue or ideas for growth. In addition to close family and friends, consider mentors and business coaches who can provide relevant insights into your business.

5. Review your business plan

Many entrepreneurs make a business plan at the beginning of their business journey, but do not take the time to revisit it from time-to-time. So, analysing aspects of that business plan like target audience and competitors, examining cash flows and what can make the business profitable, while also checking timelines to reach business goals is all equally essential to help ensure continued growth of your business.

For more information on how GoDaddy can help your small business: Domain Names, Websites, Hosting & Online Marketing Tools – GoDaddy PH.

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Sticking with old technology can be a strategic move

As competitors adopt new technology in some markets, firms that stick with the old technology may experience an initial decline before actually rebounding and even reaching new heights.



Technological innovation — especially disruptive innovation — is often heralded as the best strategy for a company. But new research published in Strategic Management Journal found that as competitors adopt new technology in some markets, firms that stick with the old technology may experience an initial decline before actually rebounding and even reaching new heights. While the rise of a discontinuous technology does pose a substitute threat to the old technology, it also further exposes niche segments where companies can gain a foothold with customers who favor the old technology.

The analysis by Xu Li, a professor at the London School of Economics and Political Science, used archival data from the traditional Chinese medicine industry in China during the 1990s. In his interviews with managers in the field, he found that some chose not to innovate along with their competitors. In many cases, Li found these companies were performing well, if not sometimes better, by not making changes. Inspired by these conversations, Li chose to study under what conditions a firm may benefit from not innovating.

Li found some prior research on why companies would stick with older technology, but none explored why — during times of disruptive change in the market — sometimes firms are able to survive and even perform better within a small niche with old technology. What Li’s paper showed was that adhering to the old technology can, in some cases, be an effective strategy that ultimately improves firm performance.

The data showed a U-curve effect for traditional Chinese medicine firms that chose not to adopt new technology: The decline in performance began as a few competitors started launching a new technology, but later recovered and reached new heights as most competitors had adopted the new technology and exited the old technology market. But a lack of competition within the niche group of consumers who prefer older technology essentially gave these firms a monopoly within a smaller market as fewer competitors remained.

“Even though the new technology is often superior in terms of functionality, it doesn’t mean that every single customer or customer segment will be willing to move to the new technology,” Li says. “It’s important to understand what customers like about your product. We tend to assume that if a firm introduces something new, then customers must appreciate the new thing or the newness of the offering. But that’s not always true. The emergence of new technology can actually reveal people’s preference for something older.”

The research also refutes the idea that when the market is small, a company won’t perform better — but that depends on how many firms are still serving this niche. If only a few firms are left to serve this market, a company has far more power to charge higher prices among loyal customers with few other options.

“When you see a firm that is not actively innovating, we tend to believe the firm must be either incapable or is suffering — it’s always a bit of a negative tone,” Li says. “Sometimes staying with old technology might actually be a strategic choice, because by doing so it might also lead to better performance.”

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Customers prefer text over video to provide service feedback

More people indicated they would likely leave written compliments or complaints about service on a restaurant-provided tablet powered by artificial intelligence. A video message option appeared to discourage leaving feedback.



At a time when one viral video can damage a business, some companies are turning to their own commenting platforms rather than letting social media be the main outlet for customer feedback. Only one wrinkle: in this context, customers appear to prefer writing a message rather than leaving a video.

In a recent study, more participants indicated they would likely leave written compliments or complaints about service on a restaurant-provided tablet powered by artificial intelligence. A video message option appeared to discourage leaving feedback.

With more restaurants and hotels turning to AI to enhance their service, the findings indicate that methods that require “low self-disclosure” would work better, meaning ones that don’t require customers to provide very much identifiable information.

“Some restaurants and hotels actually ask customers to create video testimonials that they can share, but for general customers, it seems they feel more comfortable with low self-disclosure. This is probably because people still do not trust AI to that level,” said lead author Ruiying Cai, a researcher in Washington State University’s Carson College of Business.

With a lot of hype around AI technology, many people have misperceptions about what it can do, Cai pointed out, perhaps believing it is capable of a lot more than simply recording a message.

The study participants reported being concerned about what would be done with their information in all the scenarios, but this was heightened with the option to leave a video.

For the study, published in the International Journal of Hospitality Management, Cai and her colleagues presented different online scenarios to a total of 439 people. The participants were first asked to imagine a restaurant where they had either good or bad service. Then they reported how willing they were to give the server compliments, or complaints, with either text or video on an AI-enabled tablet.

The researchers found that the participants were more willing to give feedback using text, whether positive or negative.

The scenarios also had participants receiving a theoretical immediate or delayed reward to provide feedback, namely a 5% discount of their current meal or a future one. For complaints, the reward timing did not appear to make much difference, which the authors said was not surprising as people tend to be more highly motivated to complain than compliment.

For compliments, the researchers found an interesting connection: with more participants choosing the delayed reward over the immediate one. This may indicate that giving the compliment itself is its own reward as it makes the giver feel good, Cai said.

“It’s a good start to think about how to encourage customers to leave more compliments which could be very important for frontline employees. It could also be beneficial for the customers themselves,” she said.

Even complaints are important to encourage, Cai added. As her previous research suggests, restaurants and hotels should make it easier for customers to complain to them directly rather than go elsewhere to air their grievances.

“There have been episodes when customers were not afraid of posting angry videos on their own social media,” Cai said. “If restaurants and hotels can encourage customers to complain directly to them, then they may be able to recover and solve that service failure before it goes viral online.”

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