Is Banner Advertising Still Worth Using?

February 17, 2008 | Filed Under Internet Marketing, Traffic Generation

We are living in an age….and Internet age….where banner advertising is no longer the most effective type of advertising. You know, typically, a banner advertisement would be one of those boxes that people place at the top of their web pages and it flashes consistently? At one point in time, banner ads use to drag in visitors every 30 – 80 times it is shown. However, the conversion rate for banner advertising continues to dip downwards. It is now around 0.39% conversion rate.

But look on the bright side, one good thing DID that come out of this drop in conversion rate. And that is that the price for banner advertising drops along with the conversion rate. It is now much, much cheaper to advertise via banners. If you think that banner advertising is worth your investment, you can easily get cheap banner advertising deals yourself (contact the webmaster of your choice) or through an online advertising agency.

As we take a deeper look into whether banner advertising is still an effective online advertising method or whether it is worth a cent of your advertising dollars at all, we’ll have to take a quick look at what the experts in the online advertising world have to say about banner advertising.

Branding people in the online advertising world assesses the effectiveness and worth of banner advertising in a different way. What they want from the banner advertisement is that it continues to give exposure to the brand name, the product or the company. Their concern is not the sale closed due to the advertisement. Direct Marketers, in the meantime, calculate the worth of banner advertising differently.

Let’s do a quick calculation here to illustrate how a typical direct marketer would calculate the worth of banner advertising.

Assumptions
CPM (Cost per thousand impressions) = $10
CTR (Click through rate) = 0.5%
Conversion rate = 2%

First, let’s calculate the Cost you have to incur to get ONE visitor to come to your website.

Cost per visitor = CPM / 1000 x CTR

So…

Cost per visitor = $10 / 1000 x 0.5% = $0.005

Doing the simple math above, you’ll see that the cost per visitor would come up to be $0.005. That’s HALF a penny for each visitor; you can afford that no matter what your advertising budget is.

Now, let’s take another quick look at the cost of bringing in each sale derived from the banner advertising campaign.

Cost per sale = Cost per visitor / Conversion rate

So…

Cost per sale = $0.005 / 0.02 = $0.25

That means it will cost you .25 cents to make one sale, sounds pretty good to me, how bout you?

As you can see, the cost of banner advertising is so low it’s practically begging to be used. Internet Marketers are taking full advantage for the dip in pricing by focusing and zooming into their target market, placing banner ads in websites that has the potential of bringing in the sale.

This way, they are minimizing cost while optimizing effectiveness of every dollar spent on the banner advertising campaign.

In conclusion, banner advertising is still an effective and cheap way to advertise online. The focus of your banner advertising should no longer be with websites that covers a broad spectrum of topics. Instead, focus your banner advertisements in websites that is directly related to the products and services that you are selling.

This can be a very effective way to make use of a cheap form of online advertising providing that you only advertise you banners on websites that are very targeted to your niche.

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