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Do Banner Ads Suck?

, Monday, February 21st, 2011

Mashable ran a post last month on building better banner ads.  But before it got into how that would work, the post seemed to be asking a simple question:

Is building a better banner ad even worth it?

Here’s how it began:

If you’re fed up with online advertising, you’re not alone… Special ire might be reserved for the banner ad, which, 15 years or so after its introduction, still has a click-through rate of 0.1%, or about 1 in 1,000.

This doesn’t mean that banner ads aren’t useful, but there are two inherent difficulties with non-profits running banner ad campaigns.

What’s Your R?

Our clients consistently ask about ROI (Return on Investment) for banner ads vs. search engine marketing.  But the answer really comes down to what “R” you’re looking for.

Banner ads generally run on a cost per thousand impression basis – with premium placements costing anywhere from $8 to $20 per thousand and remnant ads costing as little as $1 or $2 per thousand.

If your goal is to drive website traffic to spread awareness about a piece of website content, paying $8 per website visit probably isn’t the most efficient way to spend your money.

But the reality for most organizations is that website traffic isn’t the ultimate goal, so judging the successfulness of an ad campaign based on click-through rates doesn’t make sense.

Here’s a corporate example.  This month Toyolta ran an ad (right) on MSN.com.  Website visits don’t hurt Toyota, but their goal isn’t to get you to go to Toyota.com.  Their goal is to sell you a Camry.

The same principle is true for ads telling you to watch the latest NBC sitcom or drink Coca-Cola –getting you to interact with their website isn’t the end goal.

For our non-profit clients, the ROI usually has a more concrete online goal: getting email sign ups or raising money.  For either of these things to happen, you need to get quality visitors to click on your ad as frequently and efficiently as possible.

Cheaper vs. More Targeted

In Banner ads, except in the case of some remnant networks, the more targeted things get, the more expensive things get.  Websites charge a premium for geotargeting to a specific city, content section, or age group.  This makes for a difficult balance act that goes something like this (but is never this clean):

CPM Impressions Clicks Cost ROI
General Audience $5 1,000,000 1,000 $5,000 ?
Targeted $10 500,000 1,000 $5,000 ?

The right direction for any campaign will depend on the ROI you’re hoping for.  If it is brand awareness, than skewing towards General Audience may be better.  If it is donations, than it’s all about rigorously segmenting to see which group (or groups) are most efficient.

In Search Engine Marketing, the opposite is generally true: more targeted = cheaper. Running an ad on a broad single word searches like “cars” can cost $5 or more per click.

An ad run on searches of “used car dealer huntsville alabama” that geotargeted only to people in Huntsville, Alabama, will cost you a fraction per click because there aren’t as many advertisers to compete against.

Lack of competition isn’t the only benefit to more targeted keyword text.  You’re also only hitting people who are more interested in your product.

Here’s a non-profit example.  Wildlife Conservation Society could chose to run ads on “tigers,” but if they did so they’d also be competing for the attention of people who want to buy tickets to a Detroit Tiger’s baseball game – probably not the most prime audience for email sign ups or donations.  But if they run ads on related searches like “save the tigers” and “endangered tigers,” they can keep their CPC down while hitting a much more relevant audience.

Conclusion

Lets face it, banner ads could be a lot better.  But before discounting them from your next  advertising campaign, take a good look at your audience and goals. And if ultimately you decide banner ads are a good fit, make sure your campaign is set up so that the impact of the banner ads can be compared to other advertising mediums.

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