Why Banner Advertising Is Best Left For The Big Boys By Jason Tarasi At Isnare.com Ezine Articles

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 new affiliates; or as a way of generating revenue or traffic through paid advertising.

Both of these methods work to some extent, but the key is always to make sure the economics make sense.

Business online, like business offline, always boils down to profits; 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 impression, 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 marketer 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. So branding through banner advertising is usually best left to the big boys.

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.

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.

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