Banner advertising is dead for online lead generation. This is not news to marketers that have seen response rates for banner ads drop as low as 0.25 percent. This combined with conversion rates for banner ads having underperformed, leaves advertisers without reliable, pre-qualified customer lead lists.
So advertisers have played with the online advertising formats — making online ads super large or having them pop-up on users' screens to catch their attention. Response rates have improved a bit (for now), but do we really need to annoy so many in order to get a few more clicks?
What is missing from traditional online advertising models, such as banner ads, is the relevance for consumers. For example, when consumers are searching for ski trips to Colorado, they will not respond to banner ads for Caribbean cruises. While generic banners may build some brand recognition, they are not designed to elicit direct responses. The trend for effective online lead generation is moving away from nonrelevant banner ads toward highly relevant, targeted messages that tie into a consumer's specific interests or search queries.
Search engine leaders such as Google and Overture have proved that highly targeted, relevant ads lead to higher response and conversion ratios.
For example, Google's sponsored links directly correlate to what visitors are searching for when visiting www.google.com. Google's highly publicized Adwords program allows advertisers to create listings that appear in their sponsored link section through a cost-per-click basis. In the ultimate nod to performance, Google only displays the sponsored links that demonstrate decent response rates. If Google's users do not find a specific link relevant (as measured by response rate), the sponsored link disappears from the site, ensuring that only the most highly targeted, relevant links are presented to consumers.
The market has shown the effect of this “relevance matters” trend as evidenced by Overture rocketing from $26 million (1999) to $288 million (latest 12 months) in revenue. In just more than two years, the company built a market cap of more than $1.9 billion. All of this success is built upon the concept of making the ad relevant — in this case tying the marketing message and a link to a marketer's site, directly to a consumer's search query.
Bringing relevance to online direct marketing campaigns has also proved effective for travel, the largest market right now on the Internet. TripAdvisor, a provider of performance-based marketing services for travel suppliers, has the statistics to prove that relevance really matters for online lead generation. The company is using contextual commerce links from advertisers such as Expedia and Travelocity to present consumers with specific travel packages at the exact moment they are researching a particular destination. Instead of seeing a generic banner ad, consumers researching destinations or hotels are shown highly relevant commerce links. For example, a consumer researching hotels in Orlando, FL, is presented a highly relevant link for a hotel property in Orlando, complete with price teaser.
The results of these highly relevant links are response rates for travel promotions on TripAdvisor pages averaging 10 percent — a 40-time improvement over banner ads.
TripAdvisor's statistics on response rates clearly show that as the advertising message becomes more targeted to a consumer's search query, the response rates increase.
What this type of online marketing offers advertisers is not only record response rates, but, more importantly, qualified consumers ready to make a purchase, which, in turn, means better conversion rates.
This same, targeted online marketing approach for generating sales leads has been practiced time and time again by e-commerce leaders. Major retailers such as Lands' End understand the value of upselling and cross-selling to their customers at the point of purchase. This is why visitors buying a pair of men's jeans will see offers for men's shirts, rather than blouses.
The same lessons in relevance hold true for all online marketers, whether they are in the travel sector or another consumer industry — converting lookers to bookers or browsers to buyers is always the ultimate goal. One of the best ways to increase your response rates and get better conversion rates is to make your advertising message extremely relevant to the consumer.
As an online marketer, you need to decide whether your main objective is branding or generating customer leads. For branding purposes, banner ads seem to be somewhat effective, but for online lead generation, they have demonstrated very poor results. For online direct marketing campaigns that are intended to elicit responses, you need to market relevant product offerings at the right time that match your customers' interests.