Understanding Internet Banner Advertising

By Henry J. Fasthoff, IV
Posted Tuesday, February 8, 2005

Banner advertising is an effective way of getting your advertising message seen on the Internet. Banner ads should not be your only online form of advertising, but they are an essential part of your online advertising mix.

This article assumes that the reader knows what a banner ad looks like, but do you know how they work, and how you can derive benefit from them? Let’s define a few terms before answering these questions.

1. “Page views” or “page impressions.” These terms are interchangeable and they refer to the number of times that a page within a website has been displayed on a website.

2. “Banner view.” Like a page view, a banner view is the number of times that a banner has been displayed on website.

3. “Click through.” A click through is the number of times a website visitor has “clicked” on a particular banner ad and was transferred to the website of the banner advertiser.

4. “CTR.” CTR is the acronym for “click through rate,” which is the ratio of the number of banner view versus the number of times visitors have “clicked through” to your website. CTR is expressed as a percentage, so a click through rate of 1% means that for every 1,000 banner views, 10 visitors have clicked through to your site.

5. “CPM.” CPM is an acronym for “cost per M,” where “M” is the ancient Roman numeral for 1,000. Translation: CPM is the price your business will pay to have its banner advertisement displayed 1,000 times on a website, e.g, the cost of 1,000 banner views. So, for example, if the CPM to advertise on a site is $80.00 your business will pay $80.00 for every 1,000 banner views.

6. “ROS.” ROS is the acronym for “run of site,” which simply means that a banner ad is displayed on every page in a website, as opposed to being displayed only in a particular category of a website or only when a particular keyword is entered into a search engine.

Everyone who is in charge of a advertising or marketing department (that’s you if you’re the sole shareholder of the company) knows that advertising is, in large part, a numbers game. The more frequently your message is seen or heard, the more likely the consumer is to purchase your service or product. Take Mattress Mac with Gallery Furniture , for example. If you live in the Houston area, or if your radio can pick up the signal of almost any Houston area radio station, you cannot go a single day without hearing or seeing an advertisement for Gallery Furniture. Peppering your senses with constant reminders that “Gallery Furniture Saves You Money!” has enabled Mr. McIngvale to build his single location furniture store into an empire. (Of course, advertising alone won’t do it; you still must have a quality product or service). I have no scientific data to support this assertion, but I’ll make it anyway: I’m willing to bet that Gallery Furniture is known to more people in the greater Houston area than any other single business. How did that come to be? Mattress Mac understands the advertising numbers game and plays it better than anybody else.

Banner ads are a numbers game. The industry standard click through rate for online advertising in general is around .5%. Not 5%, but .5%. Doesn’t sound very encouraging for your banner ad campaign, eh? Well, there are ways to significantly increase the CTR of any given banner. The best way is by targeting a particular banner ad to a narrow audience, an audience that is looking specific for a product or service just like yours. Highly-targeted can boost your CTR to as much as 2%-3% or higher and significantly increase the traffic to your website.

Another valuable purpose of the banner ad is branding. Intertwined with the messages Gallery Furniture delivers about particular sales events or types of furniture is the company’s consistent and recognizable logo, color scheme, and tag lines. Your banner advertisements can, and should, perform the same function; they should be designed using your company’s logo and colors, at a minimum. Sometimes incorporating the tag line is the way to go, but other times you may want to advertise a particular special offer, product, etc. The important thing is that you take advantage of the numbers game by continually displaying your name, logo, and colors. The more visitors that see you, the more they will come to associate your name with your type of product or service, and the more likely they will be in the future to buy from you.

About the Author
Henry J. Fasthoff, IV
Principal & General Counsel
HoustonBusiness.com