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Banners
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In this article we will discuss the ins and outs of banner
ads. Are they worth your advertising dollars or are they a
thing of the past?
When the Web first started, banners were all the rage.
Today, they’re pretty much passé. They’re no longer a
novelty and unless they’re super-clever, users pretty much
ignore them. Conversion rates have dropped through the floor
and many advertisers have found other ways to push their
products.
And yet, every website still contains a whopping great
banner ad splashed along the top or running up the side. In
part, that’s because they’ve become more sophisticated with
better targeting and improved graphics. But in practice,
banner ads tend to be used for one of two reasons: as a
method of gaining/ giving users through an affiliate
program; or as a way of generating revenue—or
traffic—through paid advertising.
Both these methods work to some extent, but the key is
always to make sure the economics make sense. We’ll look
closely at the math in this chapter, but before we go on to
talk about the math of banner ads—and how to tell whether
your banner campaign is worthwhile—let’s just take a look at
the terms involved. You’re going to see these words whenever
you join an affiliate program or take part in any other kind
of online marketing scheme. You should definitely be
familiar with them.
Banner Glossary
* Banner Ad — A graphic ad linked to an advertiser’s
website. These usually run across the top of the page but
can also run up the page (“skyscrapers”). Banners are
usually limited by size.
* Banner Views —The number of times a banner is seen by
users. This is usually the same as "page views," but
counts the number of times the banner is actually
downloaded rather than the number of times the page is
downloaded. Some users click away before the banner
finishes loading.
* Clicks/ Click Throughs — Banners are operated by clicking
the cursor over them. Not too surprisingly these responses
are called “clicks” or “click throughs.”
* Click Through Rate (CTR) — The percentage of users who see
the banner and click on it.
* Conversion Rate —The percentage of people who visit your
site and actually give you money. The higher the better!
* Cookies — Small files placed on a user’s computer. They’re
used for all sorts of reasons and by all sorts of sites.
Banner ads use them to make sure the user hasn’t seen the
banner recently, which banner brought them to the
advertiser’s site, and even which adverts they’ve seen
recently.
* CPM — "Cost Per Mille." The amount you pay for every
thousand times a banner is shown—the usual way of charging
for banners.
* Hits — The number of times a server receives a request for
a Web page or an image. Not a great way to measure
interest. One page can have lots of images and get lots of
hits, even if it’s only seen once. Often, people will say
"hits" when they really mean "page views" or
"impressions."
* Page Impressions or Page Views —The number of times a Web
page has been requested by the server. Much more accurate
than hits: each view is a potential customer looking at a
page of your site. But not necessarily a different
customer...
* Unique Users — The people who download a Web page,
counted by IP address. You want to bring lots of users to
your site so that you can create a broad customer base.
The same user clicking on a banner a dozen times could
cost you money without increasing your sales. Most
reputable sites will check the IP address of the person
clicking on a link and only count it once in a 24-hour
period. If a site doesn’t do this, don’t advertise with
them.
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Banner Economics
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Business online, like business offline, always boils down to
math: the difference between cost and revenue. If your
banner campaign is costing more than it’s earning, you won’t
be in business for very long. To figure out how your
campaign is doing, you’re going to need to know your Cost
Per Mille, your Click Through Rate and your Conversion Rate.
These are your basic tools. If you don’t know them, find
out!
Let’s say your CPM is $20, your CTR is 1%, and your
Conversion Rate is 4%. (So you’re paying $20 every 1,000
times your banner is shown, it brings you 10 new users, and
you make one sale for every 25 users the ad brings). The
question you need to ask yourself is how much are you
wasting on the 24 users who don’t buy.
Cost per visitor = $20 / 10 = $2 So each visitor costs you
$2, but you need 25 visitors to make one sale, so...
Cost per sale = $2 * 25 = $50 ...if your product is worth
less than $50, you’re making a loss.
That’s pretty simple, and as you can see, there’s not a lot
of room to maneuver here. Margins are tight on banner
advertising and that applies to both the site selling the
advertising space and the webmaster buying it.
Of course, hard cash isn’t the only way to measure the
success of a banner ad, and one reason they’re still popular
is that they’re a pretty effective branding tool. After all,
advertisers spend millions on billboards without expecting
motorists to drive straight through them and make a
purchase! On the Web, those advertisers can even be
reasonably sure that the people who see their ads will be
interested in them. But branding costs money—lots of it—with
no guarantee of results. It’s usually best left to the big
boys.
The banner ads on my sites usually send users to my
affiliate partners, and the banner ads I place on other
people’s sites usually come from my affiliate programs. They
don’t cost me anything and as long I’m making the sales to
pay my affiliate partners, everybody’s happy.
If you do decide to purchase banner advertisements though,
and if you have a very specific market in mind, make sure
they are strategically placed—on sites where the traffic
will most definitely be interested in your product or
service. Find a site that suits exactly your specific
product and you’re going to be appealing directly to your
target market.
That’s it for this week. As you can see, banner ads are not
the guaranteed money making tools that they once were but
they can still be used effectively if targeted properly. Is
banner advertising for you? Only you can determine that.
Warmly,
erwin
