Online Banner Ads and ROI

It’s important to measure ROI when spending marking dollars. Tactics change (both in price and effectiveness) over time, so I regularly evaluate them to see if I can find the ones that will give my clients the greatest bang for their buck.

Today, I’m thinking about online banner advertisements. Why? Because, for all their faults, online banners are one tactic that allow the advertiser to gather hard data on their effectiveness. When I place a banner on a site, I can tell how many people respond – allowing me to make better advertisements. I can even measure the quality of the response once people click thru to my site – allowing me to develop a better mousetrap on the other end.

If you purchase online advertisements, I’d love to read your answers to these questions:

(1) Why are you buying banner ads? What is the purpose?

(2) Branding: Do you place any value on the fact that people may see your advertisement, but never click on it? How much value?

I’d be interested in this study: What percentage of people actually notice a banner advertisement, regardless of whether they click on it?

(3) Response: What Click-Thru-Rate is acceptable?

What am I trying to figure out?

If I buy 1,000,000 banner impressions at $1 CPM (easy math), I’m paying $1,000. If the CTR is 0.3%, then I’m getting a response from 3,000 people (assuming one person doesn’t click on my ads more than once, though that’d be another interested study). In essence, I’m paying $0.34 for the opportunity to communicate with each person that clicks on my banner. How does this compare to other forms of marketing?

And related to this… Let’s say my 1,000,000 banners are seen by 30,000 unique individuals. Do I place any value on the branding that happens when someone sees my advertisement, but doesn’t respond? How does this compare to other forms of marketing?

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