Banner Advertisements

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Banner Advertisements

"Banners" are graphic advertisements that appear on World Wide Web sites intended to build brand awareness or to generate traffic for the advertiser's site. The term "banner" comes from the general shape for such ads: a short, wide strip usually placed at the top of a page. The first advertisements appeared on the Web in 1993. In 2005, according to the Interactive Advertisement Bureau (IAB), ad revenues could exceed $12 billion, up from $9.6 billion in 2004, another record year. According to Ann M. Mack, writing in Adweek in 2000 and citing IAB estimates, banner advertising accounted for 52 percent of activity, down slightly from the late 1990s when its share was around 56 percent. Banner advertisement competes with contextually generated ads, direct e-mail advertising, sponsorship arrangements, and other forms of publicity.

Although ad space on Web sites can be expensive, it is an increasingly important marketing tool for small businesses seeking to establish a presence online. Experts suggest that Internet advertisingwhether through banners or through smaller "sponsored by" notes on Web sitesis the easiest and most effective way to encourage potential customers to visit a company's site. In addition, sophisticated new Web technology allows small businesses to focus their advertising dollars on specific geographic or demographic groups.


According to Vince Emery in How to Grow Your Business on the Internet, banner advertisements can be quite expensive for small businesses. For example, it may cost several thousand dollars per month to place an ad on a site with high traffic. The cost is determined by the number of people who either see the ad or follow through to visit the advertised site. Some Web sites charge per thousand impressions, meaning people who visit the Web site and see the advertiser's banner there. A more relevant number is the clickthrough rate the percentage of people viewing the banner who actually click on it to visit the advertiser's site. The clickthrough rate helps quantify the success of banner advertisements. Emery noted that a clickthrough rate of 1 percent is about normal; a 10 percent rate is outstanding.

Ideally, small businesses will want to pay only for fully delivered banners. Between 20 and 30 percent of people surfing the Web do so with the graphics feature of their browsers disabled. Turned off graphics help speed Web page transfers but also transform fancy banners into empty boxes on the user's screen. Other Web surfers use their browser's stop button feature to interrupt the up-loading of banners. These people save time but avoid looking at the advertiser's message. For this reason, Emery recommends that advertisers arrange to pay only for banners potential customers actually see.

Paying for "impressions" can also cause problems for the small business advertiser. A certain Web site may boast that it attracts 100,000 visitors; the number may only mean 10,000 unique users who visit the site 10 times each. At the same time, many sellers of ad space on the Web are reluctant to accept payment based on clickthroughs. This arrangement can leave the seller vulnerable to poorly designed advertising banners unlikely to generate clickthroughs. As a result, many sellers will only agree to clickthrough deals with large advertisers who purchase a log of space. For small businesses, the best way to determine the true cost of Internet advertising is probably neither impressions nor clickthroughs. Instead, Emery recommends calculating cost per sale or cost per lead, generated through Web advertising, in order to gauge the banner's effectiveness.


But where should the banners be displayed? Emery notes that space is sold by content and by search sites. Internet users visit content sites to find information, e.g., ESPN SportZone for sports stories, Travelocity for airline flight information. Thousands of lesser known sites specialize in every conceivable business topic or hobby. Advertising on most content sites requires small businesses to rent space for a banner with payment based on impressions, clickthroughs, or the time period in which the ad appears.

Advertising on search engines like Yahoo or AltaVista tends to be more expensive but also gives advertisers more options. For example, small businesses can buy space for a banner within a certain search category or even tied to a specific search term. If an Internet user searches for information on "fishing," the banner advertisement for a fishing tackle or sporting goods retailer can thus appear on the screen with the search results.

Many producers of Web browser software also allow advertising on their sites. As Dowling wrote in Web Advertising and Marketing, these sites can be a good place for a business to start building brand awareness. Many new Internet users receive browser software free with their PCs; they may not be technically sophisticated enough to change the default screen as it arrives. These users see the browser Web site every time they log on to the Internet; advertisers can take advantage of this fact to gain the attention of new surfers. A form of free advertising is also available from browser sites. Small businesses with exceptionally useful Web sites may be listed on the "what's new" or "what's cool" pages for a certain browser; such listing translates to immediate increases in traffic for featured sites. It may also be helpful to establish links to your site on other, related sites.

Another option for small businesses is to place banner advertisements on the sites operated by Internet Service Providers (ISPs). Some providers, known as free ISPs, depend on advertising revenuerather than user feesto operate. Many of these companies provide free Internet access in exchange for detailed information about subscribers; advertisers may gain access to such data. But as Brown noted in, advertising on established, fee-for-service ISPs like America Online remains popular as well. By charging users a monthly fee for access, these companies ensure that subscribers are likely to use the service regularly. Yet another option for advertisers is online magazines, e-zines. Most e-zines serve highly specialized niche markets that may provide a good fit for a small business's offerings.

In The E-Commerce Book, Steffano Korper and Juanita Ellis provide several suggestions for small business owners. They recommend brainstorming to create a list of all the potential options. An important aspect of this process is viewing the company's product or service from a customer's perspective. Korper and Ellis suggest putting yourself in the position of a potential buyer and trying to figure out how you might look for such offerings on the Internet. Another way to target promising Web sites for banner advertisements is to input likely search terms into various search engines and look over the list of matching sites. Most Web pages that accept advertising include contact information for advertisers.


The final step is creating an effective banner. Even a well-placed banner will fail to attract the customer if it is ill-designed. Emery noted that the best banners arouse people's curiosity and urge some action. A banner for an accounting service might say, "Click here to reduce your tax bill."

Emery also emphasized that the banner should generate traffic to the advertiser's Web site. He suggested focusing the banner's message on the single most compelling reason for a visit. In this context it is well to mention additions or changes in the site the potential customer may have missed. Emery also wrote that many companies have been successful using contests and "free" offers. Finally, he noted that advertisers need to recognize that banner advertisements typically have a short useful life. Most people will only clickthrough in their first few exposures; after that the banner becomes wallpaper and is ignored.

Even the most effective banner advertisement will not generate customers or sales for a small business if the company's site itself is poorly designed. The site should be attractive and fully functional before it's advertised. "If your company plans to spend a lot on advertising, make sure the investment is proportionate to your investment in the Web site itself," Dowling wrote. "Site content must be dynamic and informative to keep surfers coming back. Spending lots of money on advertising does no good if people leave your home page as soon as they see it."

A number of Internet sites provide helpful information for small businesses interested in advertising on the Web. It is important to keep in mind that Internet technology continues to change at a rapid pace; banner ads will likely be around for a long time, but they yield to more interactive means of reaching the customer as Web techniques evolve. In addition to banner ads, small businesses can increase traffic using other means as well. You might, for instance, include the company's Web address on brochures, letterhead, product packaging. And the "old" media (TV, billboards, and paper magazine) can point people your way as well.

see also Reciprocal Marketing


"Banner Years Ahead." Mack, Ann M. Adweek Eastern Edition. 25 September 2000

Emery, Vince. How to Grow Your Business on the Internet. Third Edition. Coriolis Group, 1997.

Freeman, Laurie. "Web Ad Revenue Up Sharply." B to B. 8 May 2000.

Interactive Advertising Bureau. 21 November 2005. Available from

Korper, Steffano, and Juanita Ellis. The E-Commerce Book: Building the E-Empire. Academic Press, 2000.

                                Hillstrom, Northern Lights

                                 updated by Magee, ECDI

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