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How are banners suited to cause sales?

Banner ads are the rectangular or square flashing boxes that we usually see on the top of the web pages on commercial web sites. We have all seen them at some time or other. Though at one point of time, this was considered to be extremely effective, research has shown that banner advertising is slowly becoming obsolete. In fact, statistics has shown the sharp fall in the click through rate (it has dipped down to an average of 0.39%).

However, in spite of all this hue and cry about “the death of banner advertising”, this method is still opted by a lot of companies, big and small and will continue to be. 

CPM or ‘Cost-per-mille’ –  The word ‘mille’ in Latin means thousand, so CPM can be more simply defined as ‘cost per thousand’. Though brand marketers determine the effectiveness of any model in an indistinct way, the direct marketers look at it very simply – how much sales does it generate immediately. Let’s take an example on how the numbers might look for banner ads. The results will differ depending on the website where you are advertising as well as how creative your ad agency is – 
The CPM is $10; the CTR (click through rate; a measurement of how effective the ad is) is 0.5% and the conversion rate is 2%. Therefore, the cost per visitor will be:
CPM/1000 * CTR= 10/1000 * 0.005= 2 i.e. $2

Now let us calculate the advertising cost per sale:
Cost per sale= Cost per Visitor/ Conversion Rate= 2.00 / .02= 100 i.e. $100
This above calculation shows that to get one effective sale, you need to shell out $100! Now that is an expensive affair! So, banner advertising on a CPM model can prove to be very costly.

It is very difficult to choose the exact reasons of making a sale – every ad agency and banner ad designers have their own methods to come to a solution. In spite of all the different methods, I will discuss some of the basic ones that are involved in causing sales:

CTR or Click through Rate – This is one of the primary factors to determine how effective an advertisement is. The Click through Rate can range anywhere between 0.39% to 10%. In a typical situation, a more targeted site will have a higher CTR. Search engines as well as directories also sell banner ads. These ads appear on screen when the user types in a particular key word; thus, for example, a pop up will come when a user types in a search word that contains the expression “lap top”.

Cost per Sale – This is the most important factor! At the end of the day, the advertiser is interested to see what his actual profit in the whole business is. I mean he really doesn’t care how high the CTR is if it does not produce proportionate sales. To ensure that you get the best results from your ads, it is important to invest in modernized and sophisticated tracking methods; these new age tracking methods are capable of differentiating between the visitors or lookers and the final buyers and also determine which web sites and ad banners are producing the most effective results. This accuracy can be attained by using the “DART ad server system from Double Click”, www.doubleclick.com/publishers/service  or by any of the tracking methods that are used in affiliate software programs.

Branding – Another approach towards effective sales is creating brand awareness and a brand image in the user’s mind. Thus the banner ads should be used as ‘branding’ tools and whenever the viewer plans a purchase, the impressions play a great role. It is true that measuring branding is a very tricky and complicated phenomenon, but if done properly it can be very powerful.