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A Banner Year For Advertising
by Kent Lewis

The simple reality of banner ads is that they are an anomaly in the advertising space. The ads are similar to their offline sister, billboards, yet they are held to a different standard when judging their effectiveness. If judged on similar criteria, banners have been shown to be as or more effective than offline advertising. The problem is that advertisers don’t understand the medium.

According to recent research by Dynamic Logic, banner campaigns were able to increase brand awareness by six percent. In another study by AdRelevance, viewers that actually click on a banner are LESS likely to participate in conversion events. According to the same study, consumers are 33 percent more likely to participate in conversion events if they view an ad and visit the site at their own convenience.

Due to the relative infancy of the Web as an advertising medium, early attempts to sell and measure banners were based on impressions and click-through rates. Industry research shows banner click-through rates have declined from an average of 2.5 percent in 1995 to .34 percent in March 2000. Unlike billboards, banner effectiveness can be tracked in many ways; whether by impression (number of views) or by the number of times a viewer clicks on it. While these metrics can be highly effective at measuring frequency and reach, they are not appropriate for rating performance or ROI.

How many advertisers rate a billboard by the number of people that pull over and write down the URL or phone number? Typically print or offline advertising effectiveness is measured indirectly by sales or better yet, market research. Why would banners be held to a different standard?

The confusion is simple, yet understandable. Measuring the effectiveness of banners by tracking click-through is no different than tracking the response rate of a direct mail piece. That is because it’s direct marketing. Unfortunately, banners are one of the most inefficient and ineffective forms of direct response media based on cost per thousand (CPM).

If you want to drive customers or sales, use direct marketing, whether print or email-based. It’s fairly cost effective, and can generate a high ROI. The advantage of online marketing is the ability to track the response real-time.

If you want to drive branding and awareness, banner may be part of an effective integrated or online-only campaign. Just don’t expect to measure the effectiveness of a branding campaign with direct marketing metrics like click-through rates. Measure it like any other branding initiative, with qualitative and quantitative research. Use focus groups or Web-based surveys to test customer recall.

Regardless of how online advertising evolves, basic marketing principles will remain unchanged. Measure success with the appropriate metrics, and make sure they are tied with a relevant marketing initiative. Until interactive marketers are able to understand the subtle differences in media, the online advertising industry will continue to grow at a much slower rate.