Banner Advertising
Now we'll compare the cost effectiveness of CPC image ads and CPM banner ads.
What are banner ads?
- Images with a company logo and/or information which are embedded into web pages that have interesting content (such as a news article).
- The traditional size of a banner ad was 468 x 60 pixels, but now many other shapes and sizes such as the 'half banner' and 'skyscraper' can be utilised to suit specific needs. (See the Internet Advertising Bureau's standard sizes here.)
- CPC ads are charged on the number of clicks an ad receives, whereas banner ads are usually charged on a CPM pricing arrangement. CPM stands for Cost Per Mille. A mille is a thousand, so a website selling banner ad space at $40 CPM means it will cost $40 to buy 1000 impressions of your banner
- A standard banner ad on a popular site would cost approx $25-80 per thousand (CPM), with a 'click through rate' of response to that banner of around 0.4% (source: Webmaster World)
- Banner ads don't usually achieve the same high click through rates as targeted pay per click advertising, as they are not linked to searches and content in the same manner
Banner Ads vs. Search Marketing
- Let's compare some typical banner ads, to a Search ad on a 'pay per click' basis in a competitive market of $4 per click (most markets are less than half this CPC), where standard 'click through rate' is about 5% (source: Overture Search Marketing):
| Ad Medium | Budget | Impressions(views of ad) | Clicks (to site) | Cost per Click | Conve- rsions | Cost per Conversion* | Performance |
| Expensive Banner | $5000 | 62,500 | 250 | $20 | 5 | $1000 | 1 conversion for every $1000 of ads |
| Cheap Banner | $5000 | 200,000 | 800 | $6.25 | 16 | $312.50 | Best possible banner ad scenario |
| Search | $5000 | Unlimited | 1250 | $4 | 25 | $200 | Effectively 20-64% cost of banner ads |
* A conversion is any action you specify that you want people to perform on your site (e.g. purchase a product, or request more information). Here we use a assume rate of 2% - i.e. 2% of people who click through to the site perform the desired action.
Conclusion
- PPC ads are much more cost effective than banner ads for increasing website traffic and sales
- However, banner advertising can be a successful method for improving product branding and exposure on frequently visited sites
- Remember that most sites hosting banner ads have repeat visitors, and most visitors view more than a single page per visit, so 100,000 impressions might only represent 10,000 to 30,000 unique visitors
- Information about the number of clicks an ad receives is always available, so make sure you understand the results of each ad campaign and only invest in the most successful strategies