Peek can help you use banner advertising effectively as part of your marketing strategy.
Banner advertising terms
Page impressions or pageviews: refers to the number of times a webpage has been requested by the server.
Banner views or impressions: refers to the number of times a banner has been viewed. Almost the same as “page views,” but some banner server programs don’t count the banner view unless the visitor stays on the page long enough for the banner to be fully downloaded from the banner server.
CPM: a metric from the print advertising, meaning “Cost Per Thousand,” using the Roman numeral “M” to stand for one thousand. A price of £20 CPM means, £20 for every thousand times a banner is displayed.
Banner ad: an ad graphic hyperlinked to the URL of the advertiser. These are sometimes static graphic images, but animated rich-media banners do much better. To standardise, the Internet Advertising Bureau (IAB) specifies receommended ad sizes in their Ad Unit Guidelines.
Click Through Rate (CTR): the percentage of click throughs to banner views. A 1% CTR means that 1% of each 1000 banner views (or 10 visitors) have clicked through.
Conversion Rate – The percentage of shoppers in an online store who actually make a purchase.
Run of Site (ROS): trefers to displaying a banner ad throughout a website or a banner network with no targeting by keyword or site category. Run of site advertising will probably cost less than more targeted advertising.
How do you measure success?
Click through rate (CTR)
This is a basic measure of how effective an ad is. CTRs range from the industry web average of about 0.20% to as high as 5% or 10%. As a general rule, the more targeted the site, the higher the CTR. For example, you’d expect an ad for tennis racquets to get a higher CTR on a tennis site than on a general sports site.
Cost per sale
A much more important figure is the actual cost of making the sale of a tennis racquet. In the final analysis, you don’t care how high the CTR is if it doesn’t result in a proportionate number of sales. What complicates this is the fact that your banner ads on the tennis site may actually sell fewer tennis racquets than those on the official Wimbledon website. You can only make this determination when you use sophisticated tracking methods using cookies to separate the lookers from the buyers, and determine which sites and which banner ads had the best result. Most ad serving software, ad networks, and affiliate programme software and services provide this kind of information. You can also determine this by coding all banner ad links so they can be tracked with Google Analytics.
While CTR and cost per sale relate to direct marketing objectives, another way of looking at banner ads is as “branding” tools. They create brand awareness, and a brand image in the viewer’s mind, whether or not the viewer clicks on the ad. But hopefully, when the viewer gets ready to make a purchase, those “impressions” will cause you to select one brand over another. Brand awareness can be measured in surveys with questions such as: “What tennis racquet brand names can you think of?”
CPM banner economics
Your results will vary, depending upon where you advertise and the effectiveness of your creative. Here are some arbitrary numbers to use in our calculation:
CPM = £2 (a not untypical rate for general, not-very-targeted websites)
CTR = 0.20%
Conversion Rate = 2% (from your landing page)
Cost per visitor = CPM / (1000 x CTR) = £2.00 / (1000 x .002) = £1
In our example, the £2 you spent to show the banner ad to 1000 people netted you 0.2% or 2 visitors to your site. Each visitor cost you £1 to get there.
Now let’s calculate what your advertising cost is per sale. At a 2% conversion rate from you landing page it would take 50 visitors to make one sale.
Cost per sale = cost per visitor / conversion rate = £1.00 / .02 = £50
In this calculation it costs £50 to get one sale? Of course, if you have a 10% conversion rate (like a few top merchants) rather than a 2% conversion rate (which is high for many small businesses), it only costs you £10 to get a sale.
Developing an effective banner ad strategy may bring thousands of people to your site who will become your customers. If you’d like to find out more then drop us a line.
How can we help you?
Call Steve Creamer or Sarah-Jane White to discuss how Peek can help with your next project on 01223 900 121.