How Effective is Banner Advertising for Lead Generation?

Have you ever considered running a banner ad?  Surely you’ve heard someone say that advertising on the web is the wave of the future.  If you cancel your Yellow Page print ad, Yellow Page reps will encourage you to try their new web products, like banner ads as one example.  But are these banner ads effective or are they just as overpriced and useless as their print products?

Banner advertisements have become pervasive across nearly every content site on the web – from Amazon.com to Yahoo.com, from NewYorkTimes.com to Yellowpages.com they are everywhere.  Online display ads, like banner ads, are typically sold on either a flat fee per month basis (Yellowpages.com) or on a Cost Per Thousand impressions (CPM) basis (Yahoo.com).  For example, if the CPM of a particular website is $10 and you purchase 100,000 impressions, you’ll pay $1,000 for that campaign, and an impression occurs each time your ad is displayed on the screen. 

Sales reps for these ads think they are unique and innovative because they claim you get the branding benefits of a display ad with the ability to gauge consumer interest in your ad with data of how many people click the ad and visit your website.  What they can’t tell you, however, is how many of the clicks or visits to your website do anything of value after they arrive at your site.

In March of 2008, The Associated Press reported that many tap water systems and watersheds in the United States were contaminated with pharmaceutical drugs. Bob decided this would be a valid time to test the efficacy of well placed and well designed banner ads.  We created ads that focused on concern over the quality of tap water and the purity of DrinkMore Water (see Figure 1).  We selected 3 local DC area websites on which to display them, thinking if people were reading stories online about problems with the tap water and they glanced at a banner promoting purified water, they would be more inclined to click the ad, visit the DMW website and then do something of value – i.e., call for more info, submit an online inquiry or make an online purchase.

The only problem with this scenario is that, historically, it has not been possible to see how many of the clicks from a banner actually do anything of value once they arrive at the advertiser’s website.  In response to this, we built a system using computer software that would allow Bob to see exactly how many of the clicks and visits from his banners called, e-mailed or made a purchase via the DMW online store.  Then, we were able to show Bob the TRUE value of his banners – not just the impressions and the clicks.

Figure 2 shows the cost, impressions and results the banner ad(s) generated for each website. DMW paid $3,550 for 300,000 impressions, five leads and three sales. That comes out to $710.00/lead and $1,183.33/sale.  If you are a believer in branding, you could use these numbers to help quantify exactly what you paid for the branding component of the ad vs. the actual sales response. 

The Takeaways

Show that kind of data to your media sales reps and suddenly you will have a whole new level of negotiating power over the CPM you pay for your ads.  We’re not necessarily saying that banner ads don’t work – you could use this data to test different creative, compare different websites or negotiate lower prices.   

In any event, it is critical to understand what you are being sold as opposed to what you actually get.  The people selling display advertising online – including banners, online videos, display ads, etc. – whether on the Yellowpages.com site or CNBC.com – are selling impressions which may or may not result in clicks.  But as the owner of the business, you want clicks that convert into sales calls, e-mail inquiries or online store purchases.  Branding should be considered a cherry on top – what you get no matter what else happens (or doesn’t happen).

Blue Corona’s technology allows you to accurately track the actions taken by every person who clicks your online ad.  The alternative is to rely on the ad rep’s logic, which typically uses the pre-established value of your website as a scapegoat for the poor performance of their ad.  They will declare if they sent you 100 clicks and your website is generally a valuable sales tool for your business, that some of those 100 clicks called once they hit your website.  And you wouldn’t even know this because when your sales reps ask the person how they found your business, the caller will say – I came in through the website – not the banner.  Sound reasonable?  Maybe – but our technology closes this loop.

If you want to receive case studies like this one on a monthly basis, please sign up for our email newsletter (look in the right side-bar of this page and enter your email address where it says, "Get Monthly Online Marketing Tips" - we will never share your email with anyone - ever).