How Banner Ads Work
by Tom Harrishttp://www.howstuffworks.com/banner-ad.htm/printable
If you've spent any time surfing the Internet, you've seen more than your fair share of banner ads. These small rectangular advertisements appear on all sorts of Web pages and vary considerably in appearance and subject matter, but they all share a basic function: if you click on them, your Internet browser will take you to the advertiser's Web site. But how do they work and why are they there?
Banner ads are usually relatively simple pieces of HTML code, but their presence on the Web and their importance in Internet-based business is immense. In this edition of How Stuff Works, we'll examine banner ads and their place on the Internet. We'll see how they work, how advertisers rate their
effectiveness, and how you can use them to advertise your site or bring in revenue. We'll also examine the technology behind them and look at some of the different forms they can take. By the end of this article, you will be a banner ad expert!
What is a Banner Ad?
Over the past few years, most of us have heard about all the money being made on the Internet. This new medium of education and entertainment has revolutionized the economy and brought many people and many companies a great deal of success. But where is all this money coming from? There are a lot of ways Web sites make money, but one of the main sources of revenue is advertising. And one of the most popular forms of Internet advertising is the banner ad.
A banner ad is simply a special sort of hypertext link. If you've read the How Stuff Works article "How Web Pages Work", then you know how a basic text link works. A bit of HTML code instructs a Web server to bring up a particular Web page when a user clicks on a certain piece of text. Banner ads are essentially the same thing, except that instead of text, the link is displayed as a box containing graphics (usually with textual elements) and sometimes animation.
Because of its graphic element, a banner ad is somewhat similar to a traditional ad you would see in a printed publication such as a newspaper or magazine, but it has the added ability to bring a potential customer directly to the advertiser's Web site. This is something like touching a printed ad and being immediately teleported to the advertiser's store! A banner ad also differs from a print ad in its dynamic capability. It stays in one place on a page, like a magazine ad, but it can present multiple images, include animation and change appearance in a number of other ways.
Types of Banner Ads
Like print ads, banner ads come in a variety of shapes and sizes. The Internet Advertising Bureau (IAB) specifies eight different banner sizes, according to pixel dimensions. A pixel is the smallest unit of color used to make up images on a computer or television screen. The IAB's standard banner sizes are shown on the following page:
The full banner (468 x 60) is by far the most popular, but you will see all these variations all over the Web. These are not the only banner ad shapes and sizes, either, but they are a good representation of the range of common banner ads. There is no universal file-size constraint for banner ads, but most Web sites impose their own limits on memory size, usually something like 12K to 16K. This is because banner ads add to the total file size of the page they appear on, therefore increasing the time it takes for a browser to load that page.
As you've probably noticed while surfing the Web, actual graphic content, or creative, varies considerably among banner ads. The simplest banner ads feature only one, static GIF or JPEG image, which is linked to the advertiser's home page. More common is the GIF-animated banner ad, which displays several different images in succession, sometimes to create the effect of animated motion. Then there are rich media banner ads -- ads that use audio, video, or Java and Shockwave programming. These banner ads, which usually have larger file sizes, are often interactive beyond their simple linking function.
Banner Ad Objectives
Advertisers generally hope a banner ad will do one of two things. Ideally, a visitor to the publisher site, the Web site that posts the banner ad, will click on the banner ad and go to the advertiser's Web site. In this case the banner ad has brought the advertiser a visitor they would not have had otherwise. The banner ad is a real success if the visitor not only comes to the site but also buys something. Failing a click-through, advertisers hope that a publisher site visitor will see the banner ad and will somehow register it in their heads. This could mean the visitor consciously notes the content of a banner ad and
decides to visit the advertiser's site at some time in the future, or it might mean that the visitor only peripherally picks up on the ad but is made aware of the advertiser's product or service.
This second effect of advertising is known as branding. We've all experienced the effects of branding before. Say you see ads on television for Brand X glue all the time. The ads don't seem to particularly affect you -- you don't leap from your couch to go buy glue -- but down the road, when you're at the store shopping for glue, they may affect the decision you make. If you don't have any other reason to choose one type of glue over the others, you'll probably choose the one you're most familiar with, Brand X, even if you're only familiar with it because of advertising.
So there are several ways a banner ad can be successful. Consequently, there are several ways advertisers measure banner ad success. Advertisers look at:
• Clicks/Click-throughs: The number of visitors who click on the banner ad linking to the
advertiser's Web site. Publisher sites often sell banner ad space on a cost-per-click (CPC) basis. • Page views: Also called page impressions, this is the number of times a particular Web page has
been requested from the server. Advertisers are interested in page views because they indicate the number of visitors who could have seen the banner ad. Although they don't measure the effectiveness of a branding campaign, they do measure how many visitors were exposed to it. The most common way to sell banner ad space is cost per thousand impressions, or CPM (In roman numerals, M equals a thousand).
• Click-through rate (CTR): This describes the ratio of page views to clicks. It is expressed as the percentage of total visitors to a particular page who actually clicked on the banner ad. The typical click-through-rate is something under 1 percent, and click-through rates significantly higher than that are very rare.
• Cost per sale: This is the measure of how much advertising money is spent on making one sale. Advertisers use different means to calculate this, depending on the ad and the product or service. Many advertisers keep track of visitor activity using Internet cookies. This technology allows the site to combine shopping history with information about how the visitor originally came to the site. Different measures are more important to different advertisers, but most advertisers consider all of these elements when judging the effectiveness of a banner ad.
Who Makes Banner Ads?
Pretty much anybody with computer knowledge can learn how to make a very basic banner ad. To code the banner, simply combine the HTML tag for a link with the HTML tag for an image. You can create the necessary graphics using a simple computer art program, like Paint Shop Pro, which you can download from this site.
To understand the coding involved, let's look at an example. Here is a basic static banner ad for How Stuff Works:
Its code looks like this:
<a href="http://www.howstuffworks.com"> <img src="http://static.howstuffworks.com/gif/banner-ad-static.gif"> </a>
The link component of the code is:
<a href="http://www.howstuffworks.com"> ___________ </a>
As you can see, the information in quotes is the URL for the How Stuff Works home page. If you were writing a text link, you would simply write something like "How Stuff Works" in the blank space, and a site visitor could click on those words to bring up the HSW home page. To make a banner link, you do pretty
much the same thing, except instead of text, you put a tag for a graphic in the empty space. The graphic tag component of the code is:
<img src="http://static.howstuffworks.com/gif/banner-ad-static.gif">
In this case, the tag simply consists of the URL location of the graphic image; the full URL would be "http://computer.howstuffworks.com/gif/banner-ad-static.gif" (go to this URL and you will see the graphic), but we only need to put the last part of the URL here, since we are already within
"http://www.howstuffworks.com." This tells a visitor's browser to load the image posted at that particular URL. The visitor can then click anywhere on the entire image to visit the How Stuff Works home page. For more information on how to code image and hyperlink tags, check out the How Stuff Works article, How Web Pages Work.
Basic, static banner ads are so simple you can make a few for your site in an afternoon, and animated GIF banner ads aren't much more complicated. On the other end of the spectrum are complicated rich media ads. Ads with elaborate animation or user interactivity require much more extensive programming ability.
Amateur banner ads often work fine, but with so many ads competing for viewer attention, many Web sites need the help of professional ad designers. Good advertising agencies and professional designers not only bring their programming skills to banner ad creation, but also their creativity and extensive marketing experience. They work to match a banner ad campaign with the advertiser's product or service, and to make innovative, attention-getting graphic content. There are many ad agencies and free-lance banner ad designers serving Web sites today, and they have a wide range of experience, ability and success. They also have a wide range of fees: You can get a professional banner ad for $50 or you can spend upwards of $1,000.
There are also Web sites that offer free banner ad creation. They either provide you with all the components you need to create your own banner ad, such as backgrounds and fonts, or they create a banner ad for you. These designers and companies do this for a number of reasons. Some simply make money from advertising on their sites, some offer free banner creation in exchange for their customers posting client banner ads on the customer's site and a few designers simply create banners as a hobby. Some popular free banner design sites are:
• Make Your Banner.com • ABC Banners
• Atomic Arts
Like most forms of advertising, banner ads vary considerably in quality because their creators vary a great deal in ability and experience. The range is even greater with banner ads than with most other forms, however, because it is so easy and inexpensive to create and post banners.
Advertising with Banners
An advertiser that is interested in posting banner ads on other sites has three basic options. The advertiser can:
• Arrange to display other Web sites' banner ads in exchange for them displaying its ad. • Pay publisher sites to post its banner.
• Pay an organization, usually a banner network like DoubleClick or Flycast, to post the banner on a number of publisher sites.
These three arrangements take many forms and advertisers and publishers must choose the specific arrangement that best suits them. If you want to post banner ads on other sites but don't have the capital to mount a traditional advertising campaign, you may choose to exchange banner ads with other sites. There are two ways you can go about this. The first is to individually develop relationships with other Web sites and trade specific banners. This is a very natural process and allows you to place your banner ads conscientiously and post other Web site banner ads that fit your site well. Your banner ad doesn't end up
on very many sites, however, unless you invest a whole lot of your time in seeking out interested webmasters.
If you want to get your banner ad on a lot of sites in a short amount of time (and don't want to pay for it) then your best bet is joining a banner exchange program.
Banner Exchange Programs
Banner exchange programs offer a simple service. If you post a certain number of banner ads on your site, they will post your banner ad on another site. Usually, this isn't an even exchange; you have to post more than one banner ad for every one of your banner ads they post. This is how the exchange program makes a profit. Their arrangement yields them more banner ad spaces than actual banner ads they need to place for their members, so they can sell the extra banner ad spaces to paying advertisers. The exact ratio varies, but 2:1, posting two banner ads on your site for every one of yours posted on another site, is a typical arrangement.
Most banner exchange programs distribute banner ads in the same way. For every banner ad you've decided to display, the exchange provides you with a piece of HTML code. This code instructs a visitor's Web browser to bring up a banner ad from the exchange program's server. This enables the exchange program to easily change which banner ads are on which sites. They can also monitor the success of particular banner ads on particular member sites, which helps them to pair sites with suitable advertisers. The advantage of joining a banner exchange program is it's a free way to get other sites to post your banner ads. The disadvantage is that you give up a lot of control over where your ads are posted and what ads are posted on your site. In most cases, the banner exchange program chooses where to put its members' banner ads, and you may not like what they decide to post on your site or where they end up posting your banner ad. Most banner exchange programs attempt to link banner ads and sites
intelligently, and they often do a good job, but there is a possibility that at some point you will be dissatisfied with a banner ad that ends up on your site.
Some major banner exchange programs are: • LinkExchange
• BannerSwap • SmartClicks • Free Banners • LinkBuddies
It's pretty easy to join a banner exchange program. Go to any of the above sites and they will walk you through their particular process. It's definitely a good idea to shop around, because different banner exchange programs have different strengths. Some programs concentrate on effective banner placement more than others, and some specialize in Web sites that feature a particular subject matter, such as religion or kid interests. Most banner exchange programs are free to join, but some also offer a better exchange ratio for a small fee.
Buying Advertising
If you are interested in buying advertising space, you have a few different options. You can: • Approach Web sites yourself
• Employ an advertising agency • Join a banner ad network • Start an affiliate program
Each of these options has its own advantages and disadvantages, as we will see.
Approach Web Sites Yourself
This is an involved, time-consuming way to place your banner ads, but it does offer some significant advantages. Mainly, placing all your banner ads yourself gives you a lot of control over how you
advertise. You can fully investigate potential publisher sites to decide if their content matches yours and you can often work with the site to find the best location for your ad. This can be a relatively inexpensive
way of advertising, if you target small Web sites that don't attract a lot of other advertisers. If you choose such sites carefully, your banner ad can be fairly effective. A small Web site that caters to a particular niche may not have very high traffic, but the people who do visit are all interested in some of the same things. If you sell rare PEZ machines, for example, a well-placed ad on a small toy collector site could bring you significant traffic.
To place advertisements this way, you have to approach each site individually, follow its particular procedures and purchase its particular advertising packages. Start by searching the site to see if they have a page for potential advertisers. If you can't find anything online, call the site or send them e-mail. Shop around for an advertising arrangement that meets your needs and fits your budget.
Larger sites will probably have a set advertising package with a relatively high price tag. Most sites sell advertising space on a CPM basis, in a package consisting of a certain number of impressions. CPM varies considerably -- you can expect to pay anywhere from $5 to $100 per thousand impressions on a fairly popular site. There is such a wide range because different Web sites have different levels of popularity and different sorts of audiences. A site with consistently high traffic will usually charge a lot more than a less popular site. If a site caters to a particular niche, it may charge more than a general interest site because its advertisers can more effectively target a specific demographic. The amount of impressions in an advertising package varies, but 50,000 to 200,000 impressions sold at a time is typical of good-sized sites. Smaller sites may not have any advertising plan whatsoever, which means you might be able to work out a good deal with them.
Employ an Advertising Agency
A full-service advertising agency will do most of the work of posting banner ads for you, and it will lend its expertise to the process. Agencies help you seek out suitable publisher sites, they negotiate the price of banner ad space, and they help you make the best use of your advertising budget. Additionally,
advertising agencies work with you to conceive advertising campaigns and they create professional banner ads for your site. They can often get a better price on advertising space because they have a lot of clients and can buy impressions in bulk. There are many good Internet advertising agencies, offering a wide variety of special services.
It's clear that using an advertising agency has a lot of advantages, but it also has one significant drawback for smaller sites: Advertising agencies usually deal only with accounts of a certain minimum size. Agencies vary considerably in reputation, services offered and size, and so also vary a great deal in price and account minimum. The best way to find out if an ad agency is right for you is to shop around. Find out what an agency offers, how much it charges and how much experience it has. Look at several agencies so you can make an informed decision.
The cost of using an agency is certainly worth it to very large companies because they need the expertise and talent of professionals to make their ads competitive with rival companies' ads. It may be a necessary investment for a smaller Web site too, if it wants to establish itself as a significant presence on the
Internet. Advertising is a very difficult process and an important ad campaign is certainly best handled by experts. If you have a limited advertising budget, however, you might do better to spend most of your money on actual banner ad placement, rather than marketing plans and top-of-the-line banner design.
Join a Banner Ad Network
If you want to place your banner ads on a lot of sites and don't want to put in the time to negotiate with the sites yourself, then using a banner network is a good option. Banner ad networks simply act as brokers between advertisers and publishers. Like banner exchange programs, they take care of placing an advertiser's banner ads and tracking all activity related to that ad. They also share one of the main drawbacks of banner exchange programs, however -- a lack of client control. Banner networks decide where to place banner ads, and they don't give each client the level of attention an advertising agency would. Consequently, there's a good chance you won't always be happy where your banner ad gets displayed. Many Web sites happily accept this shortcoming in light of the extensive services ad networks provide at a relatively low cost.
You definitely need to shop around to find a suitable banner network. For one thing, many of the larger banner networks primarily sell advertising space from high-traffic publisher sites, which may be too expensive for your budget. There are banner ad networks that specialize in more affordable advertising space on smaller publisher sites, and a few networks offer discounted "remainder" advertising space, also called excess banner inventory, which is simply ad space that didn't sell at the regular price. You should
also check out networks that specialize in a particular kind of site, as they may place your ads more effectively. Unfortunately, there are plenty of banner ad networks that promise more than they deliver and that fail to place your ads effectively, so be sure to research a network thoroughly before you join. You'll also need to decide whether you are interested in impressions or click-throughs, as most banner ad networks specialize in one or the other.
Some major impression networks are: • DoubleClick
• Flycast
• BURST! Media • ContentZone
Some major click-through networks are: • Banner Brokers
• ValueClick • BannerSpace • eAds
Start an Affiliate Program
This is a very cost-effective way to get your banner ad on other sites. If you set up your own affiliate program you can arrange to pay publisher sites only when you get a specific result. This could be a number of things, such as a visitor simply clicking through to your site or the visitor actually purchasing something once she gets there. Unlike traditional banner advertising through a banner network, you don't have to buy affiliate program click-throughs or impressions in bulk. You pay a small amount for each click, or you pay a percentage of your profit from a referred visitor. You can learn all about affiliate programs in the How Stuff Work article How Affiliate Programs Work.
Selling Advertising Space
Selling banner advertising space is a great way to use your site's traffic to generate revenue, but it can be a bit tricky. The easiest option is to join a banner ad network, which will recruit advertisers, keep track of your earnings, and control banner ad placement on your site. In exchange for these services, the network will take a hefty percentage of the advertising money generated by your ad space.
Because there are more sites that want to sell advertising space than there are sites that want to buy advertisements, banner networks tend to be somewhat choosy about the publishers they recruit. Most banner networks set a minimum monthly traffic amount, which is often fairly high. A lot of the bigger banner networks require publishers to have upwards of 250,000 visitors a month to join a CPM program. Many banner networks do cater to a range of sites, setting up different tiers to divide publisher sites based on monthly traffic. This is a good service for advertisers because it lets them choose the range of sites that best fits their budget and marketing campaign. Additionally, most banner networks put certain restrictions on publisher site content. They may exclude sites featuring adult content or socially offensive material, and they may also exclude publishers that already feature too many advertisements.
If your site gets a good deal of traffic, more than 100,000 impressions per month, then you should be able to join a good banner network's CPM program. If you have a smaller site, you should look into banner network click-through programs, which tend to have lower minimum traffic requirements. You probably won't make much money in a click-through program, however, because you are only paid when visitors actually click on the banner, which is very seldom (typically, less than 1 percent of the people who see a banner will click on it).
Once you've joined as a publisher, banner networks operate very similarly to banner exchange programs. You put a piece of HTML code in the ad space on your site and the banner network takes care of the rest. They place banner ads they feel fit your site and track the relevant impressions or click-throughs so you will be paid correctly. As with exchange programs, you will probably end up with unsuitable banner ads on your site from time to time, and you won't get a whole lot of control over the process.
How much money might you make through a banner ad network? Most networks are selling "run of site" ads to advertisers, and they are getting something like a $5 CPM rate for the ads. Then the network takes between 30% and 50% of the $5 as its cut. Therefore, you might expect to earn something like 0.3 cents per impression that appears on your site, or a $3 CPM rate. If your site generates 100,000 impressions per month, you can expect to receive a check for $300 every month.
If you are getting paid per click, you might receive anywhere from 3 cents to 20 cents per click. 5 cents might be a typical average. If you get a 1% click rate and you have 100,000 impressions per month, that means that you might expect to receive $50 per month.
Selling Space Yourself
If you want total control over the banner ads that appear on your site, you may want to recruit advertisers yourself. There are many more sites on the Web that want to sell ad space than there are advertisers, so you need to have a fairly impressive site to go this route. The things that impress advertisers are high traffic and specialized content, because these are the things that translate into impressions and high click-through rates. If you want to sell ad space, your task is to convince potential advertisers that placing a banner ad on your site is a good investment. You do this with traffic numbers, information about your visitors (called demographic data) and with specific content that relates to their product or service. Since you won't be using a network or exchange program, you'll also have to set up technology to track visitor traffic, so you can bill your advertisers correctly. Approaching advertisers, marketing your site, tracking traffic and collecting money from advertisers all require a lot of time and effort, but if you are committed to growing your Web site and only running banner ads that would appeal to your visitors, the payoff can certainly be worth the effort.
What Makes a Banner Ad Effective?
There are no concrete rules about what makes a good banner ad. As in all advertising, an effective banner ad is the product of a number of different factors, and there is no sure way to predict how well any banner ad will do. A lot of successful banner ads are the result of extensive trial and error
experimentation: A Web site puts a banner ad up and monitors the response it gets. If that doesn't work, the site tries something else. What makes a good advertisement is largely a mystery.
That said, there are a few qualities that generally make for more effective banner ads in many situations. If you are mounting a banner ad campaign you should keep these suggestions in mind:
• Post banner ads on pages with related Web content -- the more related, the better. • Advertise a particular product or service in your banner, rather than your site generally.
• If you do advertise a particular product or service, link the banner ad to that part of your Web site, rather than your home page.
• Put banner ads at the top of the page, rather than farther down. • Use simple messages rather than complicated ones.
• Use animated ads rather than static ones.
• Your graphic content should pique visitor curiosity, without being too obscure.
• Keep banner ad size small. If the page takes too long to load, a lot of visitors will go on to another page.
The most important things are to make visually appealing ads with interesting content and to intelligently place the ads so they are exposed to audiences that would be interested in them. Combining these qualities is a simple notion, but effectively accomplishing this is a complicated art. And like any art, advertising is constantly evolving. New approaches to banner ads pop up all the time.
One interesting development that has been around for a while is targeting. Banner ads that are targeted appear based on the Internet user's activity. For example, advertisers can buy keyword advertising on a search engine, such as Alta Vista or Yahoo, so that their ads are displayed when someone performs a particular search. If an advertiser buys up keywords related to its product or service, it can probably increase click-through rates, because the visitor has already demonstrated an interest in finding sites on that particular subject.
The Internet is an attractive medium to advertisers, because cookies allow sites to gather information about each visitor. It's a good bet that the future of Internet advertising will involve extensive use of this technology to target individual Internet users. Many Web sites are already experimenting with presenting
each visitor with specific banner ads that would be likely to interest them, based on information gathered from surveys and the visitor's Web-surfing activity.
The Future of Internet Advertising
Web experts have been predicting the end of traditional banner advertising for years, noting dwindling click-through rates. They have several different ideas of what will replace it as the dominant means of advertising. Pop-up ads, advertisements that appear in their own, small browser window, have been growing in popularity. Many Web users find them extremely annoying because you have to close each browser window, and if there are enough of them, they can overload some browsers' capacity. Some Internet research shows that text links are more effective than banner ads. This is probably because so many Web users are automatically aware of banner ads and so can easily ignore them while text links are less obvious -- they appear to be part of the site's content.
Advertisers have also found some success with interstitial ads. Like Pop-up ads, these ads appear in their own browser window. When a visitor clicks on a link, the interstitial ad appears before the browser brings up the linking page. Most interstitial ads close automatically, so they are less annoying than pop-up ads, but they briefly fill the user's screen, so they definitely make an impression.
If you keep an eye on Internet news, you will continually see stories on the death of the banner ad, as well as stories about upturns in banner ad success. Banner ads will most likely be around for some time, but it's a good bet they will take new, interesting forms. As we've all read in recent years, the Internet is in its infancy, and webmasters have only begun to tap its potential. The same can certainly be said for Internet advertisers, and since advertising is the main source of revenue the keeps Web sites going, you can be sure it will continue to evolve at an accelerated rate.
Using Banner Ads to Promote Your Website
by Dr. Ralph F. Wilson, E-Commerce Consultant http://www.wilsonweb.com/articles/bannerad.htm
We are in a period when banner advertising seems to be on the wane. You know, those rectangular, flashing boxes at the top of webpages on commercial sites. Click-through rates have dipped to 0.39% average and the industry magazines regularly carries articles discussing the death of banner ads. But while banner ads aren't as effective as they once were, the truth is that a great many companies, large and small, still use banner ads as part of their advertising mix and will continue to do so. Nevertheless, advertisers are becoming more sophisticated about when and how to use banner ads.
Defining Terms
To explore this broad and evolving type of advertising we need to begin by defining some terms: • Hits -- A fuzzy term meaning the number of times a webserver has been "hit" by a request for a
webpage or a graphic image. Since perhaps 5 out 6 "hits" are for graphic images, the number of "hits" can be grossly misleading. Usually people mean by "hits" the number of times a webpage has been seen, but to be precise, the better term is "page views" or "page impressions." • Page impressions or page views -- Refers to the number of times a webpage has been
requested by the server.
• Banner views -- Refers to the number of times a banner has been viewed. Almost the same as "page views," but some banner server programs don't count the banner view unless the visitor stays on the page long enough for the banner to be fully downloaded from the banner server. • CPM -- A metric from the print days of advertising, meaning "Cost Per Thousand," using the
Roman numeral "M" to stand for one thousand. A price of $15 CPM means, $15 for every thousand times a banner is displayed.
• Banner ad -- An ad graphic hyperlinked to the URL of the advertiser. These are usually animated GIF images, though we are seeing an increasing number of MacroMedia Flash banners. The full banner size is 468 x 60 pixels, and most sites limit the file size of the graphic to 12K to 16K. The Internet Advertising Bureau (IAB) specifies eight different "standard" banner sizes.
http://www.iab.net/iab_banner_standards/bannersource.html • Creative -- "Ad-speak" for the actual banner graphic.
• Click -- When a visitor clicks her mouse on a banner ad, she is transferred to the advertiser's site. The number of responses to a banner ad is sometimes refereed to as the number of "clicks." • Click Throughs -- Same as "click," commonly used to count the number of visitors who click on
the banner and are transferred to the advertiser's site.
• Click Through Rate (CTR) -- The percentage of click throughs to banner views. A 1% CTR means that 1% of each 1000 banner views (or 10 visitors) have clicked through.
• Conversion Rate -- The percentage of shoppers in an online store who actually make a purchase. This is typically 1% to 5% in online stores, but can be lower or higher.
• Cookies -- Small files written to your computer when you view a banner ad, visit a website, or put a product in a shopping cart. This helps the banner server to keep from showing you the same ad, or perhaps show you ads you might be more interested in seeing. Cookies are controversial, but are here to stay; too much of the Web is run by cookies to get rid of them. Cookies also allow an advertiser to track which banner ad a visitor saw that brought him to the advertiser's site, and which banner ads resulted in actual sales.
• Run of Site (ROS) -- Refers to displaying a banner ad throughout a website or a banner network with no targeting by keyword or site category. Run of site advertising costs substantially less than more targeted advertising.
How Do You Measure Success?
You'd think that success would be easy to measure, but advertising has never been a simple art. Ad agencies have their unique self-serving spin, advertisers set their own objectives, and banner ad designers see something else again. Here are some of the factors involved:
Click Through Rate (CTR). This is a basic measure of how effective an ad is. CTRs range from the industry average of about 0.39% to 10%. As a general rule, the more targeted the site, the higher the CTR. For example, you'd expect an ad for Wilson Tennis Racquets to get a higher CTR on a tennis site than on a general sports site. A run of site on a general site such as MSNBC would get an even lower CTR. (Disclosure: I hold no financial interest in Wilson Sporting Goods, but wish I did.) Directories and search engines also sell banners ads that pop up when a particular keyword is entered. Thus your banner could show only when someone entered a searchword that included the word "tennis." However, the more targeted the banner exposure, the higher the CPM (cost per thousand banner views).
Cost Per Sale. A much more important figure is the actual cost of making the sale of a tennis racquet. In the final analysis, you don't care how high the CTR is if it doesn't result in a proportionate number of sales. What complicates this is the fact that your banner ads on the World Tennis Ratings site may actually sell fewer tennis racquets than those on NCAAChampionships.com. You can only make this determination when you use sophisticated tracking methods using cookies to separate the lookers from the buyers, and determine which sites and which banner ads had the best result. This kind of precision is enabled by using the DART ad server system from DoubleClick,
http://www.doubleclick.com/publishers/service/ as well as the sort of tracking used in affiliate software programs.
Branding. While CTR and cost per sale relate to direct marketing objectives, another way of looking at banner ads is as "branding" tools. They create brand awareness, and a brand image in the viewer's mind, whether or not the viewer clicks on the ad. But hopefully, when the viewer gets ready to make a
purchase, those "impressions" (a wonderful ad agency buzz word!) will cause you to select Coca Cola over Pepsi, or Barnes and Noble over Amazon, or JCrew over Lands' End. Branding is very difficult to measure, but can be very powerful. Typically, only the larger and better-established companies have the budget to pursue branding consistently. Brand awareness is sometimes measured in surveys with questions such as: "What brand names can you recall in the field of tennis?"
CPM Banner Economics
While brand marketers may assess effectiveness in some fuzzy way, direct marketers look at any advertising method in terms of how many sales it produces immediately. Let me give you an idea of how the numbers might look for banner ads. Your results will vary, depending upon where you advertise and the effectiveness of your creative. Here are some arbitrary numbers to use in our calculation:
• CPM = $10 (a typical rate for general, not-very-targeted websites) • CTR = 0.5%
• Conversion Rate = 2%
Cost per Visitor = CPM / 1000 * CTR = $10 / 1000 * .005 = $2
In our example, the $10 you spent to show the banner ad to 1000 people netted you 0.5% or 5 visitors to your site. Each visitor cost you $2 to get there. Hmmm. Not inexpensive. But now let's calculate what your advertising cost is per sale.
Cost per Sale = Cost per Visitor / Conversion Rate = $2.00 / .02 = $100 Oops! You mean it costs me $100 to get one sale? Yes, Virginia. Of course, if you have a 10% conversion rate rather than a 2% conversion rate, it only costs you $20 to get a sale.
Lower Cost Approaches
What this all means is that banner advertising on a CPM basis can be expensive. If you have a compelling banner that 5% to 10% of the viewers click on, that can change the economics. If the price you pay for banner ads drops to $3 CPM, that can help, too. If you can pay a modest cost per click through, that would make a huge difference in the cost per sale. If you can pay a commission of 5% to 15% only when a sale is made, affiliate programs begin to look more and more attractive. But no matter which approach you use to pay for advertising, developing and placing 468 x 60 pixel banner ads is likely to be part of your advertising mix.
Online Advertising: Taking Over the Web?
By Tessa WegertJune 19, 2003 www.clickz.com/experts/media/media_buy/article.php/2224061
If you spend a lot of time surfing the Web, you've probably noticed a change in the advertising as of late. Suddenly, ads are appearing in some unique places and assuming unfamiliar forms.
Given recent statistics, it's easy to establish why. According to a report released by Nielsen/NetRatings, the top traditional (offline) advertisers increased their online share 30 percent by the end of last year. These same companies are deemed "more apt to experiment with different ad formats."
It's this willingness to try new approaches combined with increased ad clutter and more competition among advertisers that's changing the online landscape into something more advertising oriented than we've yet seen.
Offline, marketers have long used every possible medium as a vehicle for promoting products and services. Some say no publicly viewed surface is safe from the armies of media strategists. Now that the initial thrill of banner ads is a distant memory and advertisers are unafraid to experiment, it stands to reason advertising would show up in new places online: in advertorials, in strategic publisher/advertiser microsite partnerships, and on previously ad-free sites that still maintain bannerless formats.
The trend is being embraced by traditional advertisers and online publishers. It demands analysis from the consumer perspective. We know many consumers still don't appreciate that advertising is necessary to sustain free-content models. They're weary of countless banners, rich media ads, and full-screen Internet commercials every time they go online. How will they react to even more intrusive advertising, appearing in places formerly safe from marketing incursions?
A few weeks ago, I came across a Fidelity Investments placement on Monster.com. To post a résumé on the famed job search site, users must first go through a registration process involving a fairly brief online form. After submitting it and viewing another registration-related page, the user receives a third page. This looks suspiciously like the original registration form. It's not, however, part of the registration process. It's an ad-sponsored means of database generation.
The form's fields are prefilled with the personal information the user just provided, making it easy to click "submit," hence approving Fidelity Investments' use of that information. A small note at the top of the page lets users know they've successfully created a job search account, but the focus is the advertiser and the pitch: "seven helpful facts that you need to know about rolling over your 401(k)."
I've discussed what I call "integrated advertising." I've praised advertisers for ingenuity forging successful, content-integrated online placements. This particular placement employs a similar strategy but appears at a time and in a place consumers would not expect a sponsored message. Does that make it equally ingenious? Or does it cross the line?
One could argue the advertiser and publisher are following the rules by identifying the section "My Monster Special Offers" and featuring appropriate disclaimers. Others would say it's misleading, arguing consumers could easily misread the page's purpose and what they agree to by resubmitting their personal data. Some may argue the placement is a deceptive attempt at database generation that could result in an unqualified list and a damaged brand image.
Regardless of how you interpret this type of online placement, it's certain we can expect to see many more experimental advertising methods in the months to come. Advertising is bound to pour into nearly every nook and cranny of the Net as marketers seek their ideal approach. As a result, marketers and media buyers will be faced with a difficult decision: Follow these trailblazing traditional advertisers' examples and use the Internet as a testing ground, or stick with relatively inoffensive, tried-and-true placements such as text links and paid search placements.
Those advocating the cautious route will take a wait-and-see approach. The Fortune 500s will whittle down their budgets until they find something that does work. It will be an interesting ride -- even for those just watching from the sidelines.
Surprise! Badly Written Banner Ads Yield Bad Results
www.atnewyork.com/news/article.php/729941Banner bashing. It's hip. It's now. It's the rallying cry of pundits, ad agency clients, and traditional
copywriters who have always had their suspicions about the efficacy of Web advertising and now believe they have the facts to back up their bluster.
"Banners don't work!" yelp the bashers. "They're a waste of money and don't generate results! Internet advertising - bad! Internet dissing - fun!"
But given all the we-told-you-so histrionics, one has to question whether the issue isn't banner ads as a flawed configuration, but rather banner ads with flawed messaging.
Back when banners began dancing across Web pages in the mid 1990's, it was common for click-through rates to be in the double digits, regardless of the banner's message. As the novelty of banners lessened and their presence exploded, click-through rates tumbled. It should have been apparent that the creation of click-worthy banners required more ingenuity than simply tossing a wiggling logo and a Click here! button into a 480 X 60 frame.
Recently approved International Advertising Bureau (IAB) formats for bigger, louder, and more eye-catching ads are a partial solution to the challenge of low user response. But once the novelty of their production gimmicks has worn off, these new formats won't invite sustainable clicks unless their inherent messages are skillfully composed. It's an e-advertising example of the "Waterworld" phenomenon: mega production plus middling story equal micro box office (or in the case of banners, miniscule click-throughs). So how can a Web copywriter improve the messaging of his/her banners to make them more consistently clickable? Here are some simple yet effective suggestions:
Lead with a question -- Want to write better banners? Looking to ramp up your click-through rate? See how engaging this technique can be in getting users' attention?
Create a lyrical rhythm - well-written banners follow a catchy word flow from frame to frame. The number of syllables chosen to convey the message is deliberate, like haiku. The pacing of the words is energetic, like a roadside Burma Shave ad. And the idea builds to a pay-off, like a well-told joke (frame 1 is the set-up, frame 2 the fill-in, and frame 3 the punchline).
Keep it single and simple -- the more ideas you force your banner to communicate, the more muddled it will be. Choose one easily digestible point and drive it home with as few words as possible.
Show, don't tell -- if an image can get your idea across instead of words use it. Your message will be communicated quickly, easily, and memorably.
Write visually -- banners offer infinite choices of entertaining visual techniques that can enhance and sell your message (words and images shrinking, dissolving, stretching, morphing, zooming in, crawling, etc.). Keep these tricks in mind as you compose your text and include them as suggestions for your design partner.
Offer an offer -- when it comes to calls to action, offers rule. Free downloads, free demos, free white papers, free info kits, free shipping -- pretty much anything free (or other incentives, such as percentage or dollar off savings) will get the user clicking faster and more consistently than an uninspiring and ambiguous Click here! button.
Justify the click -- if your banner isn't offer-driven, continue its message by making the call to action specific to what the user would receive if the banner were clicked, (i.e. Click for more info! or Click to see it in action! or Click to get started!).
Brand with benefits -- creating a banner with vague messaging and cool vibe may seem like a novel way to build brand awareness, but it won't generate many clicks. Instead, enumerate the enticing and
absolutely essential benefits (e.g. save money, improve productivity, lose weight, etc.) that the brand promises.
Nix the tricks -- banners using cute come-ons ("Catch the monkey and win $20!") to boost site traffic and are fun to write, but they can only work once. You also run the risk of alienating scads of users who will never visit your client's site again.
Test as the user -- once your ideas have been completed, imagine the mindset of a user who's viewing a page where your banner will appear. Re-read each of your ideas and ask yourself: is this banner's message communicated credibly, simply, and irresistibly enough to compel a user to leave the site that he/she is in and click to my client's site?
Considering the newness of the Internet as a messaging vehicle relative to other media, it's
understandable that the craft of banner ad writing is still a work-in-progress. But when wittily, artfully, and precisely composed, banners can be a powerful and extremely effective component in a company's advertising and brand-building arsenal - regardless of how boisterously the bashers may bleat to the contrary.
The Rich Media Ad: A Thing of Beauty
By Dorian Sweet www.clickz.com/experts/ad/rich_media/article.php/3517791 July 8, 2005
For some, beauty is only skin deep. Superficial suffices. For the rich media unit, beauty must be more than what viewers see on the surface, though what they see in the first second or so had better be beautiful too, in a relevant sort of way.
Let's explore the a rich media unit's layers: engagement, interaction, and exit. In doing so, we'll be able to give viewers beauty and substance in exchange for their time and perhaps get some conversion while we're at it.
A rich media ad's beauty lies in the engagement layer. It's what the viewer sees in the first couple of seconds. As in traditional offline advertising, 99 percent of an ad's success is based on how well a viewer's interest is piqued in the first two seconds. The Web has so much more potential to garner a fruitful relationship than offline advertising. With a rich media ad campaign, (relatively) big money is on the line. Understanding how to succeed at the engagement layer is pretty important.
Let's start with what not to do.
Amex Seinfeld/Superman "Webisodes" are a great example of what not to do. Sheer star power was wielded to get online users to seek out American Express advertising. Getting to the site wasn't easy; getting into it was even harder. And let's be honest, who wants to wait for a three-minute video spot to load, other than hopeless Seinfeld fans and hopeless online marketing people (like me)?
When we assume people will endure technology just to be marketed to, we've lost our perspective on what people want to see online. How many times have I heard, "Just throw this TV spot on the Web. That'll get some clicks!" Unfortunately, that happens a lot; the glare of celebrity and the flash of technological innovation blind us to the fact viewers have the power to click away.
A great rich media ad is like a story. It has a beginning, middle, and end. The beginning is the engagement layer, and the technology that supports it is as fast as viewers demand. It has the right amount of image, copy, movement, and sound.
Once hooked, viewers are ready to be immersed in the ad. This is the interaction layer. They play with it, get some information, give you something of theirs, are rewarded, or just go away. Marketers often try to do too much at this stage. Stick to marketing basics and keep the message simple. The interactions can be fun, complex, and imaginative, but the information you convey must remain simple. Otherwise, you lose people. Information overload sets in, and you train viewers to zone out.
If you've been successful with engagement and interaction, you only have to conquer the exit layer and you've won gold. This layer is about reward. You've created a desire; now you must fulfill it. What do you do? Offer a "click here" or "submit" button. Invite them to go to the Web site or to find out more. Thank them.
Here's where we shy away from online advertising's potential. The exit layer should be a reward for the viewer.
The key word is "reward." That's why a landing page isn't always the best next step. Providing a surprising, personalized, relevant experience is. The ability to get more information through an ad unit without leaving the site or a 20 percent discount when you book your travel reservation via the ad is certainly gratifying. If only ad-serving technologies could keep up.
I know what you're thinking: a customized landing page garners great conversion rates. It's a classic direct marketing approach, right down to page design. Of course those conversion rates are great -- but what are they compared to? Being deposited into some deep link in a site? A product page that was out of the campaign's scope?
The reality is a customized landing page is the best solution we have now. But many marketers can't even do that right (here's some help in that area). Too often, the people who control online marketing efforts don't control the pages within the Web property. There goes your reward -- and that conversion. Yet there's more to the rich media experience than just getting people to sign up, purchase, or reserve. It can provide the kind of emotional messaging marketers and consumers love. We have the capacity to measure how users interact with ads, even if they don't heed our calls to action.
Imagine pure, unconditional interaction is the point of a campaign. If it were possible to have a 10MB ad unit (and some day it will be), who really needs a Web site?
I'm not coming down on conversion rates or landing pages. But let's challenge ourselves. Let's take advantage of the medium's richness. Consider engaging, interacting with, and rewarding the viewer right there in the ad, where you can control the quality of the experience. Consider creating a rich media unit with the purpose of pure (beautiful) brand immersion. Soon enough, technology will get a user through the shopping experience without ever leaving the ad unit. And when it does, we'll be ready.
Way Beyond the Banner
New online ad formats are whirling, shaking, popping, and tilting all over the Web. By Owen Thomas, June 2002 Issue
CNET started it, with giant rectangular ads that ran smack-dab in the middle of news articles. Then Yahoo, NYTimes.com, and a handful of others weighed in with full-screen video promotions and interactive gimmicks like animated cars that tore across their homepages. Before long, it seemed that every major site was experimenting with some new, increasingly attention-grabbing ad -- all in an attempt to woo jaded advertisers back to the Web. Herewith, a look at the new ad types and what's working. AD FORMAT COST* (CPM) EFFECTIVE- NESS ANNOYANCE FACTOR
Banner Standard rectangular ad still found atop most
webpages. $6-$60
Pros: Much, much cheaper than ever before, and clickthrough rates have rebounded.
Con: Average clickthrough rate: just 0.75%. Check it out: Any commercial website
Floating ad or Shoshkele
Animated object, like a car that races across your screen.
$25-$35 Pro: Can be amusing and attention-getting. Con: They work only with the latest Web browsers. Check it out: Unitedvirtualities.com
Interstitial or Superstitial
Full-page ad, often with video or animation.
$30-$45
Pros: Unavoidable; can accommodate movie trailers and TV spots. Con: Web users complain that ads take over the screen.
Check it out: Unicast.com Large rectangle Oversize ad placed in the center of the
page. $10-$85
Pro: Ideal for news outlets, where readers don't want to leave website. Con: Average clickthrough rate is 1% to 1.5%.
Check it out: News.com Pop-under Ad opens in a
window under the webpage. $2-$5 Pro: Low cost; intrusive.
Con: 72.4% of people close the ads without reading them. Check it out: LATimes.com
Pop-up Ad opens in a window on top of the webpage.
$10-$75 Pro: Highly intrusive.
Con: Highly intrusive. Check it out: Hollywood.com
Skyscraper Vertical banner. $5-$75 Pro: In tests, raise brand awareness 7%. Con: On small screens, readers can't see ads. Check it out: Americangreetings.com
Superbanner Twice as wide
as a standard banner. $6-$35 Pro: 20% higher clickthrough than banners. Con: 0.9%? That's still pretty low.
Check it out: Yahoo.com
Surround session Users are served ads from one
advertiser during their entire visit to a site.
$90-$115
Pro: Raise brand awareness 11%, nearly three times more than banner ads do.
Con: Costly.
Check it out: NYTimes.com Text ad No-frills, text-only ad that appears alongside search results.
$20-$80 Pro: Average clickthrough is 2% on Google. Con: No graphics.
Check it out: Google.com
*Prices are measured in cost per 1,000 impressions (CPM) and are based on ranges found in published rate cards; negotiated rates may be much lower. SOURCES: AdRelevance; Interactive Advertising Bureau; Jupiter Media Metrix
Two Intrusive Ads Deemed Appropriate
By Robyn Greenspan | March 17, 2004 http://www.clickz.com/news/article.php/3327491 Twice is just enough for intrusive ads, with pop-ups being among the least welcome, according to Dynamic Logic's AdReaction Study that measures consumers' perceptions towards advertising. The December 2003 survey revealed that consumers deemed two intrusive ads per hour were appropriate on free Web sites, while also evaluating reaction to traditional advertising and different online ad formats.
For the most part, consumers agreed with experts, finding intrusive advertising frustrating and annoying. Nearly one-third of Dynamic Logic's 425 respondents reported that ads that appear over Web content, such as pop-ups, out-of-frame and floating ads, on the pages they are browsing were never appropriate.
The findings were determined through a median number where 50 percent of the population is above that number and 50 percent are below. Based on that calculation, 17.2 percent of respondents indicated that two over-content ads per hour would be an appropriate number to view on a free Web site. Interestingly, 3.3 percent of respondents felt that 10 over-content ads per hour would be appropriate.
Frequency was the biggest complaint consumers had about the intrusive ads, with 70 percent reporting that there were too many over-content messages. Fifty-eight percent were annoyed that they were required to close the ads, and 56 percent were concerned about blocked content.
Survey respondents were more tolerant of banners, skyscrapers and interstitials, while placing pop-ups, pop-unders, and out-of-frame ads among the most negatively perceived forms of online advertising. Rounding out the mid-range were ads with audio, large rectangles or squares, and ads with video.
"It's interesting to note that when online ads are generalized, pop-us have a negative perception," said Christina Goodman, marketing manager, Dynamic Logic of the findings. Among the forms of traditional advertising Dynamic Logic asked survey recipients about, newspaper, magazine, radio, and billboard/outdoor ads generated more positive reactions than Web, opt-in mail, and direct mail. Not surprisingly, telemarketing and non-opt-in e-mail, or spam, inspired the most negative results.
The three-part survey included individuals from Dynamic Logic's database that had previously participated in a study using a Web intercept model that utilized pop-ups, possibly influencing the results. "Participants for the AdReaction study were recruited via e-mail, taken from a database of individuals who filled out an online survey in the last four years," Goodman clarified.
CPA or CPM? That Is the Question
By Heidi Cohen www.clickz.com/experts/crm/actionable_analysis/article.php/3421141 October 14, 2004
Like Hamlet, online marketers face a tough decision. Do you buy online media for branding power or purely for cost efficiency? Beyond the media buy, whether you use cost per action (CPA) or CPM has strategic implications.
Given online advertising's measurability, both brand and response-centric marketers look at online spend in a strictly action-driven, promotional context. From this tactical perspective, they use online promotional budgets to generate leads or other actions that, like their offline equivalents, yield some branding. Yet the potential synergistic effect of smart spending can be overlooked.
According to Jason Heller, CEO of Mass Transit Interactive, a hybrid media model delivers the best results by building brand and purchase intent while selling.
CPM and CPA are complementary advertising buys that fill different needs. CPM brands, while CPA primarily drives response. CPM can also be used for direct marketing. (Remember, direct response doesn't work for every product.)
"Typically, the blue-chip advertisers my firm works with almost always buy on a CPM basis," said Paul DeBraccio, CEO of Interevco, "while lower-tier companies in the same categories generally rely on a CPA model."
Strategic Perspective
Consider your marketing strategy's media aspect. How do the following apply to your offering?
• How do target customers use the Web? How does this relate to your offering? How does it fit into your overall strategy?
• What are your marketing and advertising goals? Do you need to improve branding to build purchase intent, drive immediate response, or both? How will the Internet get you where you need to be?
• How does your ad's viewing environment reflect on and influence branding and purchase intent? Can your media buy scale? Broadly assess editorial direction, content, target audience, and other advertisers (in terms of product and quality).
• How does creative, including copy, design, format, and landing pages, relate to the target customer and your marketing strategy?
Tactical Considerations
Publishers price ad impressions based on reader quality and demographics. Marketers usually advertise online to acquire customers and immediate sales, as measured by return on investment (ROI). For advertising to be effective, it must usually drive potential customers from ad to Web site to a required action's completion.
The difference between CPM and CPA buys depends on who bears the risk for converting an impression into an acquisition. This is basically your yield (the product of CTR and conversion rate (CR)).
When publishers sell media on a CPM basis, they know how many page views are required to fulfill their obligation. When they sell media on a CPA basis, they don't know in advance how many page views are needed. Many factors affecting yield (e.g., landing pages and conversion processes) are beyond their control. CPA-placement sellers generally charge a premium to accept the risk of your ad yield. Using CPA-only deals can limit your options and potential universe, as not all publishers accept them. Choices are very limited, primarily to sites with lots of unsold inventory and low demand.
Consider:
• Which sites efficiently contribute to your reach goals? Do they deliver quality customers? (If you don't know the quality of customer derived from each combination of media placement and promotional campaign, you need a better marketing tracking system.)
• How does media context interact with your ads? Is advertising integrated with content? Does this environment help increase purchase intent? Does the content complement your product (e.g., health for health products)? Should you develop and/or test new creative approaches? • Are the media cost effective in light of your strategic goals and key indicators? What's your
projected customer lifetime value?
• Can the campaign's effectiveness be improved by optimizing various factors, such as format, content, landing pages, and media placement, to get higher conversion rates and lower acquisition costs? Run different tests to determine which work best for your offering. Analysis
Is a CPA or a CPM basis more cost efficient for your specific campaign? To find out, you must express CPMs and CPAs using consistent factors. Express CPMs in terms of acquisitions or CPAs in terms of impressions or CPMs (the industry standard). For today's exercise, total advertising costs only include the media expense. Also, these formulas are useful if you buy only on a CPM basis but track acquisitions. To calculate CPM:
Media CPM = [media spend/number of impressions] x 1,000 Now, express CPM in acquisitions. Since:
Impressions = number of acquisitions/[CTR x CR] Then:
Media CPM = [media spend/[number of acquisitions/(CTR x CR)]] x 1,000 To calculate CPA:
Media CPA = media spend/number of acquisitions Now, express CPA in impressions. Since:
Number of acquisitions = number of impressions x CTR x CR Then:
Media CPA = media spend/[number of impressions x CTR x CR] Sample Calculations
Use the following information to see how easy converting from one measurement to another is. Assume CTR and CR are known based on past experience:
• Total media cost = $180.00 • Impressions = 30,000 • Media CPM = $6.00
• Clicks = 600 • CTR = 2.0 percent • Acquisitions = 200 • CR = 33.3 percent • Media CPA = $0.90
To determine media CPM based on CPA and acquisition goals, first find impressions: 1. 200/[2.0 percent x 33.3 percent]
2. 200/[0.02 x 0.333] 3. 200/0.00666 4. 30,030
Then, plug the impressions into the CPM formula:
Media CPM = [$180.00/30,030] x 1,000 = $5.99 (differences due to rounding) To determine to media CPA based on CPM and impressions, first find acquisitions::
1. 30,000 x 2.0% x 33.3% 2. 30,000 x 0.02 x 0.333 3. 30,000 x 0.00666
4. 199.8 (differences due to rounding)
Then, plug in the acquisitions into the CPA formula:
Media CPA = $180.00/199.8 = $0.90 (differences due to rounding)
You should pay more to advertise where your ad receives more attention and doesn't suffer from viewer fatigue. As a result, fewer impressions are necessary to acquire better-performing customers. Myopic marketers may not consider the fact lower price can translate into less-productive media.
To truly understand your customer base's dynamics, use fully loaded costs. A customer's true lifetime value is based on its revenue streams minus the cost to acquire and maintain him. This varies by media source.
No matter how you purchase media, either CPM or CPA, you must manage customer acquisition on a CPA basis that includes all marketing costs to understand your ROI.
Creating Compelling Search Engine Ads and Landing Pages
By Shari Thurow, Guest Writerhttp://searchenginewatch.com/searchday/article.php/3396681
Effective search engine advertising goes far beyond simply bidding on keywords. With both ads and landing pages, you have scant seconds to capture the imagination and clicks of a searcher.
Search engine advertising presents many challenges. First, advertisers need to purchase the most relevant keyword phrases. Second, ads must be written to compel consumers to click on the ads. Third, the ads and the keyword buys need to generate clicks from qualified buyers. Advertisers don't want their search engine advertising campaigns to generate unqualified traffic, costing them money and offering no hope of conversion. Additionally, ads must comply with the search engines' editorial standards -- a lot of work for what appears to be a simple ad campaign.
Assuming search engine ads do reach the right audience, the landing pages you display are an essential component to help you convert browsers into buyers. In this Search Engine Strategies session, a panel of experts discussed ways to get the right clicks from search engine ads and to design landing pages that convert.
Creating compelling search engine ads
"For sponsored search ads, you have 1.8 seconds and one glance to convince searchers to click on an ad," said Gordon Hotchkiss, President and CEO of Enquiro Search Solutions, Inc. "Once searchers arrive on your landing pages, you have 13.2 seconds to convince visitors that they are on the right site."
Hotchkiss divides searchers into researchers and buyers. Researchers can be qualified leads. After researchers gather enough data about the range of products and services that many sites offer, they might return to your site to make the final purchase. Buyers have a shorter timetable. They are more likely to make a purchase or inquiry at the time of the search.
Both researchers and buyers look for the same characteristics in a search engine ad, including: • Query term in the title and description
• Product information (features, comparisons) • Trusted brands and vendors
• Trusted URLs
Researchers and buyers are different in that researchers are looking for trusted sources of information, such as product reviews from trusted sources of information, and buyers are looking for value-added features, such as discounts and free shipping.
"B2B or B2C, you must know your audience," said Misty Locke, President of Range Online Media. "Do your research. Who are you speaking to? Who do you want to speak to? Know your client and take that across the board from keywords, creatives and the site. Deliver the message and content that works best for your audience."
Effective landing pages
With B2C (business-to-consumer) landing pages, product photos and prices are a must. End users need to view the product they might be purchasing and its features. Sizes, color options, availability, and shipping rates are
components of landing pages that should be measured and tested. Seeing trusted brands in both the ad and the landing page can also lead to higher conversions.
With B2B (business-to-business) landing pages, advertisers often cannot specify a price for a service. For B2B landing pages, the panel made the following recommendations:
• Instead of a specified price, use a price range. End users who cannot meet the minimum price requirement are filtered out early in the sales process.
• Create an added value, such as a 10% discount, a free gift, or an additional service offer (purchase one service and get another service for half price).
However, researchers tend to value price comparisons more than query words. Buyers value a clean, professional layout and conversion paths more than researchers do.
Since buyers are more likely to make a purchase at the time of an ad view, a clear and concise clickstream carries considerable weight. "When deciding your perfect mix, always remember the 30% rule," said Locke. "With every click your customer has to take to find their have the potential to lose 30% of your sales."
Testing ads and landing pages
In order to measure the effectiveness of both ads and landing pages, all panelists gave the same advice: test test test. A/B testing is one of the best ways to measure conversion rates.
Panelists recommended comparing only one variable at a time. Do not A/B test both an ad and a landing page at the same time. Measure the effectiveness of query words in an ad, for example, with the same landing page. Once the ad copy has been finalized, then measure the effectiveness of different landing page design, copy, and features with the appropriate ads.
"This is not an overnight process or skill," Locke concluded. "At times the number of keywords, the varying CPC's, the creative and the variety of landing pages can be overwhelming and overthought."
Always know the variables you are testing before you begin an advertising campaign, have a clear idea of how you are going to measure the success (number of clicks, positioning, clickstream), and always have a control group for comparison. With careful testing and analysis, site owners can create and maintain successful search advertising campaigns.
