Don’t Write Off Web Banner Ads Just Yet

The ubiquitous Web banner – 468 by 60 pixels – started with high hopes. It was expected to make the Web profitable by selling eyeballs, driving traffic to sites and promoting online sales. It was, along with e-commerce, the way the Internet would make money.

At first, it seemed to be working. In 1997, the Internet Advertising Bureau published a study concluding that a single exposure to a banner ad significantly improved advertisement awareness, brand awareness, brand perceptions and potential for sales. However, the Web banner appears to have been oversold. According to NetRatings, click-through rates dropped from 1.35 percent in May 1997 to 0.39 percent in March 2000. Ad space sales prices also dropped to as low as $5 per thousand impressions, with even lower rates more common today.

Advertisers are concerned that the Web banner does not work, and sellers of ad space are still trying to make money somehow on the now-unglamorous Web banner.

What happened? It has been six years since the first online ad appeared. First, the original success was because of novelty, and when the novelty wore off, people stopped clicking. Online ad overload is what we have today, with hundreds of ads competing for our attention on any given day. Second, advertising skill and imagination were lacking in online banners. Third, the Web banner was not realistically assessed.

Both buyers and sellers wanted it to achieve more than it could. The metrics developed to evaluate Web banner campaigns started as a count of impressions, then cost per impression, then cost per click-through and even cost per sale. It became difficult to meet the expectations. Sixty-eight percent of companies surveyed by the Association of National Advertisers in 1999 stated that a key barrier to online advertising is the inability to measure ROI. Online ad measurement has even spawned a whole new subindustry, with AdKnowledge and DoubleClick leading the pack.

To prop up the Web banner, Web marketers are trying to tie marketing information gathered from banners to other marketing information, which creates increasing worries for privacy advocates. They are also striving to use more powerful interactive technology in banners, such as 3rich media2, to make them novel and interesting. Furthermore, marketers are doing significant research to target the best audience with their ads more precisely.

But the banner should be used for what it does best – building awareness. In its recent report Online Advertising Through 2005, Jupiter Communications said the Internet will pass the more established media in ad spending, with online advertising expected to reach $16.5 billion by 2005. The “clutter” will continue to grow rapidly, because Web commerce will keep fueling online advertising, according to the report. Advertisers essentially have to overcome the clutter in order to obtain any sort of ROI and successfully establish a brand.

Because of their limited space, Web banners cannot effectively deliver long messages. That is why traditional direct mail marketing – with long letters and inserts – gets a better response rate than banners. A clever Web banner ad, however, has a number of key components. It has to be extremely eye-catching and in some cases, where appropriate, provocative. The message has to be as short and strong as possible, therefore piquing interest and avoiding confusion. Effectively targeting to the right market will also make the Web banner a valuable branding vehicle into the future.

Jupiter expands upon the trends needed to spur the future success of online ads. Broadband and other new ad platforms will lead to a heightened effectiveness of online ad development. Online marketers will have to embrace a variety of tactics to better integrate their offline and online advertising initiatives, including e-mail marketing. The report also indicates that flexible pricing will be critical, with online ad representatives needing to move toward a “consultative sales approach.” If the advertisers are misled when deciding placement, it will ensure a “lose-lose’ situation.

In the past, almost any banner could pull a significant response. In the future, the once-dominant ad banner will have to share the spotlight with other forms of online advertising. Because of the growing Internet audience, banner sales will grow. It may be enhanced by stronger technology, but the intelligent and creative use is the key to success.

Finally, like any other form of advertising, expertise in the art and science of advertising will be necessary. Compared with print and broadcast, online advertising is still in its infancy. Perhaps at some point in the future people will gather around the water cooler and discuss the cool/funny/innovative ad that they saw on the Internet. n

• Ray Katz is president and co-founder of i-site Inc., Philadelphia.

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