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Don't Give Up on Banner Ads–Effective Ones Can Capture Your Target Audience 

By Brian Schraff (

You've seen it before.  That rectangular box at the top of a Web page hawking everything from appliances to zero money down on a new car.  These mini-billboards–called banner ads–are there to entice you to click over.

So why are these ads on virtually all Web sites big and small?  Banner ads are used as a way for advertisers to create awareness for offline and online products or services as well as generate site traffic to a particular Web site.  Those advertisers also know that the potential audience is huge.  In 1999, the global Web population reached 196 million. And with access to the Internet becoming more readily available, that number is expected to soar to 502 million users worldwide by 2003 according to International Data Corp.

Because of this, Internet advertising is booming.  According to a study by the Internet Advertising Bureau, a national online advertising association, advertising revenue on the Web reached an impressive $4.62 billion in 1999. This was an increase of 141% from 1998's reported $1.92 billion.Banner ads make up the bulk of those dollars, accounting for 56% of Internet advertising revenue.

That's the good news.  The bad news is that advertising dollars spent online are going up and click-throughs (clicking on an area that leads to another site) are going down.  A year ago, the average online ad got 0.7% click-throughs.  Recent studies show the average online ads today get 0.3% click-throughs–nearly half as effective as a year ago.

So, why would anyone want to advertise online?  Because banner ads provide added value for advertisers: they get real-time measurements of an ad's success.

While the numbers speak volumes about the ineffectiveness of banner ads, some of the fault should be placed on advertisers not heeding the basic tenets of effective marketing.

Bad click-through rates can often be blamed on poor targeting, shabby ad concepts and inadequate program management.  Once you entice the visitor to click over to your site, what's the payoff?  If a visitor's impression of the banner ad and the expectation he has for what the Web site offers are not in concert, chances are the visitor will immediately leave the site.  Every ad should have a strong payoff.  The reward should be the site itself.

Whether an ad campaign is print or electronic, each has measurable objectives and desire for return on investment (ROI).  The key is to create strong solid action-building programs that have compelling messages and concepts with targeted media that are well managed. Few advertisers on the Web understand that.  With a little bit of planning and management, an advertiser should be able to significantly surpass average click-through rates.

Online advertising creates a closed-loop system in terms of its return on investment.  That is, the investment on advertising doesn't necessarily translate into ROI. Brand awareness cannot be measured as ROI.  Ultimately in any closed-loop system, advertisers recognize that every advertising dollar out has an impact on a company's ability to make money either now or in the future.  Brand awareness will drive higher sales and click-throughs in the future.   

How to Place a Banner Ad 

Before you start wondering about the number of pixels on a standard banner (468 wide by 60 pixels high), you'll need to do some planning.

First, you'll have to define your target audience.  Who are they?  What types of Web sites are they likely to visit?  When it comes to designing the ads, creating several ads targeting different sites will help you reach your intended audience.  A variety of ads will allow you to rotate them onto different sites, as long as the target audience is the same.  

Pricing Methods

 Here are some ways sites charge for banner ads:

o     CPM (cost per thousand impressions)–amount of dollars to serve 1,000 ads.

o     CPC (cost per click)–amount of money paid to site for each click-through.

    CPA (cost per acquisition)–amount of money paid to site for a specified action (membership forms, commission on a product sold).

In general, a Web site catering to a vertically targeted market will charge more for advertising than a broad market site.  The key is to weigh value versus cost. Perhaps the product or service you are trying to sell lends itself to mass communication, so targeting is relative.

 Measuring Banner Ad Effectiveness

 Now that the ad is running, you should measure and compare the effectiveness of the ads over a specified period of time. Managing the ad campaign is just as important as targeting and the type of concept you utilize to communicate to potential customers. By removing ads that do not generate good results and quickly replacing them with new and improved ads, you should be able to get an immediate boost in interest.  You should also recognize under performing sites and replace them with sites similar to those that are performing well. Add to your list any sites similar to those you see are performing and find out if they can extend your success to more viewers.

Match the most creative ads with those sites that are best at referring visitors, as a springboard to creating campaigns that are more effective.

The following are some ways online ad performance is measured:

 Number of impressions–number of times ad is served and viewed by site visitors.

 Percent of those becoming visitors–number of people who complete membership forms or give personal information.

 Number of unique visitors–same individuals who visit the site in a given period.

 Conversion rate–number of visitors drawn into taking an action (e.g. a purchase, membership form filled out, etc.).

Actual transaction–visitors who make a purchase.

Click-through(s)–visitors who click on a link or ad that takes them to another site or location.

 Type throughs–number of visitors generated through print ads.

 Click-streams–the route and number of clicks taken by a visitor.

Cost per click-through–a charge for each click-through.

Tracking the Results

 By comparing your cost per thousand (CPM) and click-through rate (CTR), you can make a decision on how effective your banner ad is.  You can then figure out if you are capturing the right audience by advertising on the right Web site. Of course, you'll need in place the correct mechanisms to track your most successful ads, best referral sites and the number of click-throughs and click-streams.

And just because they don't immediately click on your ad, it doesn't mean all is lost.  According to a report co-sponsored by America Online and Ipsos-ASI, an advertising research firm, 40% of Web surfers who remember seeing a specific banner ad go back to your ad and re-evaluate it.  Maybe it's not as eye catching or appealing as you first thought.  Don't be afraid to re-design and make some changes. Give Internet users a reason to click on your banner.

When it comes to banner ads on the Net, animated GIFs are most prevalent. Placing animated GIFs, flash or Java actions on your Web site is the easiest way to add action to a page. Like a cartoon, an animated GIF is a series of individual images that are viewed in sequence to create motion. The downside of the GIF format is that more images create a larger file size.  Download time is dependent on file size.  As you know, Internet users aren't about to wait for an advertisement to download.  Banner ads should be no larger than 12K. That's where Flash and Java may add real value and be worth the cost and hassle of hiring a professional to help design your site.

 To keep the file size small on your banner ad, reduce the numbers of colors in the image.  Also, reducing the number of frames will keep the size down. But be careful not to keep it too simple.  A motionless ad may be ineffective on a typical portal page with plenty of visual competition–no one will bother to click on it.

Creating banner ads with Java or Flash has also begun to catch on.  These ads are very attractive and eye catching, but not all legacy Internet browsers have the right plug-ins to display these. People with older browsers will simply skip over these.  It will take a combination of all of these to create an effective and attractive banner ad. 

Placing the Ad

 So now, you have an extraordinary banner ad that is sure to capture the attention of your target audience.  The next concern is where to place this ad.  Placement is an essential issue that shouldn't be overlooked.

Portals, or search engines, are good places to start.  With sites such as Alta Vista, Excite, Lycos, and Yahoo!, companies have a choice of advertising campaigns to select from.

The most targeted approach on these types of sites is a keyword campaign. You can purchase a keyword or phrase on the site and whenever that is typed in for a search, the user will see your banner when they get the results from that query.

A Run of Channel (ROC) or Run of Site campaign allows your banner ad to be placed on a certain site, page or section of the Web site.  For example, if your company sells pharmaceuticals over the Internet, then you would want your banner ad to most likely appear in the health section.

The least of the targeted campaigns is Run of Network (RON).  With RON, your banner ad would appear just about anywhere and everywhere on the Web site.

Costs to place banner ads are reasonable.  Most pricing standards are based on cost per thousand (CPM), which is the rate of impressions or amount of times the ad is viewed by Web visitors.

Another good way to get some inexpensive exposure is to join a banner exchange program.  Most of these programs are free.  With this program, advertisers place banners on each other's Web pages.  Most banner exchange programs offer advertisers reports that track the success of the ad.

One of the largest banner exchange programs is Microsoft's LinkExchange Banner Network.  According to Microsoft, LinkExchange reaches over 450,000 sites on the Web and is viewed by over 40 million people .  LinkExchange allows you to control who will see your banner and which banners appear on your site. 

The Future of Banner Ads

 They're not going away.  Click-through figures may be down, but banner ads still drive traffic. People who are disappointed by the performance of banner ads should perhaps reevaluate their targeting and optimization.  Effectiveness is not built into the medium, but in the content.


Brian Schraff is president of Schraff Group, a fully integrated e-business agency with a successful 22-year history. The firm leverages its expertise in advertising, public relations, Internet application development and Internet business consulting to offer its clients truly integrated business and marketing support. Schraff Group is Orange County's leading firm for hot ramp Internet start-ups, as well as established companies with e-business initiatives.  Additional information can be accessed at





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