This is the first part in a series on The Basics of Online Advertising.  I’ll be posting a new entry each week for the next four or five weeks.

What is Frequency Capping?

Frequency capping is the act of placing a restriction on an advertising campaign that mandates that are particular user only see an ad a fixed number of times over a given period. This usually takes the form of impressions/day/user (or impressions/hour/user). In an ad serving system this will show up in two ways:

• Frequency Cap: X Impressions / Y Hours
• Frequency Cap: X Impressions / Y Days

The X and Y in these settings are usually variables. The Y tends to have predefined drop downs in the interface like 12 hours, 24 hours, 36 hours or 1 day, 2 days, 3 days.

It is common to refer to frequency caps at one per day as the “tightest” cap. Increasing the frequency is referred to as “loosening” the frequency cap. These phrases are common in the industry.

Why choose to apply Frequency Capping?

Another way of saying this would be: Why apply a frequency cap? In the advertising world the advertisers are primarily concerned with two things with every campaign: reach and frequency. Controlling reach is a matter of trafficking the campaign to the locations viewed by the target audience. Frequency, limiting the amount of exposure to the campaign, is where frequency capping comes into play.

Consider the scenario where an ad campaign’s requirement is to show at least two advertisements to every person encountered every day for a month. This is a common example of when to apply a frequency cap; in this case two impressions per day.

Why modify a Frequency Cap?

Changing a frequency cap once a campaign has started can tune the campaign for better performance or to achieve some campaign goals. A frequency cap of two per day may not be as effective as three per day when it comes to the particular performance metrics of the campaign; such as driving traffic to a product site. Performance data gathered when testing different frequency caps on particular properties or audience can be used to adjust the frequency cap of the campaign as a whole.

As a general rule the lower the frequency cap the better the performance will be per impression. But higher frequency caps can yield more overall performance for the campaign. There is usually a cost to benefit analysis involved when determining the right frequency cap for a campaign.

How does the Frequency Cap interact other settings?

A tight frequency cap can limit the overall impressions a campaign will receive, especially if the target audience is particularly small. The impression limit for the day, the daily cap, is often employed to limit the campaigns overall exposure, but it can be rendered redundant in cases where there is a small audience and a tight frequency cap.

Consider the following scenario. The audience his 1,000,000 unique users, the daily cap is set to 3,000,000 but the frequency cap is set to two per day. The campaign, at best, will only achieve 2,000,000 impressions for any day under that frequency cap. The daily cap never comes into play to control the campaign.

By no means should a person trafficking a campaign leave the daily cap unset. Audiences can shift and a campaign can run out of control if the number of unique audience members rises unpredictably.

Often times a frequency cap can be applied at the campaign level, rather than the site level. This global setting reduces the risk to the advertiser of adding additional inventory sources to the campaign. If the campaign reaches a user on one site it won’t be seen by the same user on another.

What are the challenges in applying a Frequency Cap?

There are two ways to apply a frequency to a user. One is to leverage a browser cookie or similar in-browser data storage functionality. The other is to use an online data store such as a key-value store that uses some browser fingerprinting to identify a user and a lookup table read and write information about that user on an ad serving system.

Of the two methods the cookie is more reliable at identifying unique users, but the online data store is more reliable with browsers and applications that do not allow cookies. Some browsers are now shipping with certain cookie functionality turned off which negates the cookie based frequency capping.

User privacy concerns are often cited to discourage the user of cookies in online advertising. While most frequency capping is done on an anonymous basis, the act of setting a cookie for any purpose often draws scrutiny from privacy advocates. As with any debate, the conversation is ongoing and the outcome will likely be a perpetual compromise.

[SlideDeck id=’97’ width=’100%’ height=’250px’]