The Changing World of Banner Ads

Direct marketing professionals have left their stable worlds of list rentals, toll-free numbers, regression models and performance metrics in the past year to enter the world of e-commerce.

The transition hasn’t always been easy. To many, it’s like going back to school, learning new tools, new skills and new media.

Take banner advertising. A typical content site makes its money by selling real estate on various pages of the site. These real estate spots are sold to various advertisers based on the number of available impressions. It is the advertiser’s job to put up the most enticing banners, generating click-throughs to the site with the hope of selling products and services. Of course, that is the key — getting the eventual sale.

To a traditional direct marketer, going into banner advertising is similar to buying space in various publications. After all, look at what the two media have in common:

• Banner ads and print ads can be purchased based on circulation.

• Banner ads and print ads can be purchased based on targeted audiences.

• Banner ads and print ads can be used to build brand awareness by repetition over time and venue.

• Banner ads and print ads can cost a whole lot of moola.

Of course, there are differences:

• Print ads need to be planned for well in advance, while banner ads can be bought today and be online tomorrow.

• Print ads cannot be changed in format once the ad has been placed. Banner ads can be rotated in and out of circulation based on performance.

• Print ads can have a lot of space to play with, while banner ads are limited in size.

The flexibility of the banner ad format is what appeals to direct marketers. After all, the concept of tailoring an offer to a uniquely qualified audience is half the foundation of traditional direct marketing success. Consider that a banner ad campaign can appear on different sites, in different formats, with different offers, for a fraction of the cost that a traditional print campaign can. Designers can create a banner to fit not only the space, but also the look of the site. The prohibitive cost of designing a print ad for each venue is cut into infinitesimal fractions here. And the more it looks right, the higher the click-through rate.

Banner ads, of course, are a new medium compared with print. But they have come a long way in a few short years. They went from static ads to animated GIF formats, then to HTML using form fields. Now they are using Flash technology, performing as miniature, movie-like commercials that compete with television. Of course, this was necessary since the Web appeals to the ultimate remote-control flickers. If you don’t catch viewers’ attention in a few seconds, they are long gone.

And there’s the rub. Banners were great fun when the Web was young. They enticed surfers to discover new sites and go places they had never been before. As the Web developed, the number of advertisers grew exponentially. And as the competition for viewers’ attention heated up, viewers became increasingly tired of them. After all, what were banners but just more television commercials? Since the Super Bowl, the appeal of banner ads has fallen dramatically. More viewers are tuning out banners to focus on where they already know they want to go. Only newly converted Web surfers are looking for the directional signposts that banners have become.

Banner advertising will not go away. But the metrics that drive them are already changing. Consider that the cost of an ad divided by the customers acquired equals the customer acquisition cost. It is a simple, obvious formula for evaluating the success of any medium. But until recently, most sites tended to evaluate advertising success based on click-through rates. The search was on, not for the buyer, but for viewers, a kind of land-grab comparable to the settlement of the American West.

Unfortunately, as many of those settlers found out, and as many advertisers are finding out now, it is not the land you grab that counts; it is the land you keep, and the cost of keeping it.

• Lesli Rodgers is vice president of acquisition and retention at Inc. Reach her at [email protected]

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