| Banner Advertising Explained |
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Advertising on the web can be a tricky and confusing business for some business owners especially if they are new to banner advertising and online advertising.
Many site owners and sales people will bombard you with technical sounding terms and all kinds of figures to impress you in to spending money with them but really at the end of the day the decison to put a banner campaign into effect will be based on logic and the knowledge and understanding of what the it all means.
Here is a quick guide to some of those "spin" terms you will hear from the ad guys.
Hits
A generic 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."
Unique Visitors
This is probably the most important figure you need to know when making the decision to advertise on a web site becasue you can gauge immedietaly how busy a web is is by the number of "uniques" a site gets.
When tracking the amount of traffic on a Web site, it refers to a person who visits a Web site more than once within a specified period of time. This could be a day, week or month.
Usually this is measured in daily terms.
For example, marbellaguide.com received 98,018 unique visitors for the month of March 2006 which is an average of 3,161 unique visitors per day.
see our stats history here
Software that tracks and counts Web site traffic can distinguish between visitors who only visit the site once and unique visitors who return to the site.
Different from a site's hits or page views, which are measured by the number of files that are requested from a site, unique visitors are measured according to their unique IP addresses, which are like online fingerprints, and unique visitors are counted only once no matter how many times they visit the site.
There are some ISPs that use Dynamic Host Configuration Protocol, such as AOL and cable modem providers, which use different IPs for every file requested, making one visitor look like many. In this case, a single IP address does not indicate a unique visitor.
Page impressions or Page 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/standards/adunits.asp
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 refererred 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.
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.
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).
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, although they are controversial, 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.
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.
Lets look at an example 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
Oh Dear!
You mean it costs me €100 to get one sale?
Yes. Of course, if you have a 10% conversion rate rather than a 2% conversion rate, it only costs you €20 to get a sale.
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