An overall strategy of spending advertising dollars on web sites and traditional banner advertising is not necessarily the best use of an advertising or marketing budget; the ROI of traditional banner advertising on the Internet just isn’t as good as it used to be. The typical click-thru ratio for banner advertising has fallen drastically recently. People just don’t click on banner ads like they used to; they’re now performing “research” on search engines to find products and services. This is where traditional banner advertising fails and search engine marketing wins; search engine listings now drive more traffic to websites and, in the long run, end up having a better return on investment because corporations ultimately spend less money to acquire a sales lead. To determine this, though, we need to first examine traditional banner advertising and the amount of money spent to acquire a sales lead. We then need to compare this traditional online marketing with search engine marketing.
Traditional Banner Advertising
If the goal of an online advertising campaign is to use traditional banner ads for branding purposes, then there are specific things that can be done to track the return on an investment. Also for branding purposes, banner ads used for branding should be designed a certain way. For branding, banner ads should usually include a company logo and/or a product logo along with easy-to-read text. The banner ad would get the “point” across without requiring the viewer to actually click on the banner ad.
The most important pre-cursor to paying for banner ads is to find out what we’ll get for our advertising dollars. It’s easy to calculate potential ROI in the online world. For example, a typical trade magazine web site may get about 30,000 page views a month. And banner ads typically result in a 1% click-through rate nowadays. So, we could expect 30,000 views (impressions) of that banner every month (perhaps 10,000 unique people would see it). If we assume a click-through percentage of 1%, then 300 people would end up clicking on the banner ad. Of that 300 people, then perhaps 1 or 2 might fill out an online form and become a sales lead. If those banner ads cost $30 per 1000 impressions (number of times the ad was shown), then you would spend about $1000 for each sales lead acquired.
Examining this example further, let’s estimate that a corporation’s sales goal is to acquire 100 new sales leads per week. To receive 100 sales leads per week, the corporation would have to spend $100,000 per week. Assuming that more qualified sales leads come from websites that are related to the to product or service being sold, it would appear that it might not be possible to spend $100,000 on traditional banner advertising per week related websites.
Before money is spent on traditional banner advertising on industry web sites (or any other website for that matter), we need to decide what the goal is. Is the goal branding? If so, then you might consider putting your company logo and/or our product logo on a banner ad and run it hundreds of thousands of impressions at a cost of $5 or so per 1000 impressions, rather than just a few thousand impressions. The goal of branding is to get as many people in the industry to see the logo or message, not necessarily have them click on that logo or ad and become a sales lead.
If the goal is to generate sales leads, then there are other ways to generate quality sales leads online. This would include providing some sort of incentive for people to give the corporation their contact information (such as a “giveaway” or something similar). Generally speaking, running banner ads is not a good way to generate sales leads, based on the amount of traffic that needs to be generated in order and the overall return on the investment. In any case, the most important factor is to make absolutely sure that the whole advertising campaign is “converting” the campaign’s website traffic into sales leads. For example, a proper online campaign would contain a specific web page that includes an online form along with an incentive for people to give their real contact information. Not only would online click-thrus from banner advertising be forwarded to that specific web page, specific search engine listings would be forwarded to that specific page, as well. More specific information about converting web traffic into sales leads is discussed in the section titled, “Sales Leads.”