Generating Revenue through Banner Ads on Your Website
by Dr. Ralph F. Wilson
Note to Professional Marketers: The language in this article limits industry jargon to a minimum in the attempt to explain a very sophisticated and complex subject to owners of smaller websites. Thanks for your indulgence.
Imagine yourself sitting back watching banner ad dollars grow in your Web garden. Long summer days lying in your hammock, interrupted only by trips to deposit money in the bank. If that's what you think putting banner ads on your site offers, you probably ought to hang your hammock on the grounds of some institution. Farming a Web garden is hard work, and not everyone should try. Let's look at what's involved.
Generating Traffic
First and foremost, you have to have enough traffic so advertisers will want to pay for an ad on your site. There's only one way to generate this kind of traffic: create such a great resource that people find out about it, share with their friends, and return to themselves. When the Web was young, Scott Bannister developed a way to automate submissions of website information to Web search engines, and began Submit It! It became the most popular service of its kind on the Web. Website owners flocked to it, first for its free service, later for its even better commercial service. When the site was new, advertisers wouldn't give it a second look, but when it began to attract thousands of visitors a day, it took on value as an advertising site.
But think for a moment about what is involved in developing a popular resource: (1) a good idea, and (2) either an abundance of time, or an abundance of money, or both. Submit It! involved specialized CGI programming (Scott was a computer science student who could do it himself), and then constant tending as Web search engines and directories came and went -- and evolved. It also took lots of promotion to let people know it existed.
Many great resources populate the Web today -- directories, news services, download sites, movie databases, hobby or industry information centers, and the like. If your site is headed in this direction, then it may have potential as a banner advertising site.
Crunch the Numbers
How much revenue can your site generate? Let's crunch the numbers. Most ads are sold on a CPM (cost per thousand "page views" or "impressions") basis. A highly targeted site which appeals to physicians in private practice might command $80 CPM, while a less targeted resource might bring in $35 CPM. Advertising on sites which draw the Internet public at large might sell for $5 to $10 CPM. The average at present may be around $35 CPM.
Let's say that your site's traffic logs show 5,000 page views a week, or 20,000 per month. (Make sure you don't count raw "hits," since you can't include images in the totals.) This chart will give you an idea of potential income. Note: If you sold advertising through a media buyer, then you'd receive 15% less than these amounts to cover their commission.
Monthly
Page
Views
Monthly Gross Income
$5 CPM
untargeted
$35 CPM
average
$80 CPM
highly targeted
20,000
$ 100/mo
$ 700/mo
$ 1,600/mo
100,000
500/mo
3,500/mo
8,000/mo
500,000
2,500/mo
17,500/mo
40,000/mo
1,000,000
5,000/mo
35,000/mo
80,000/mo
Note: Rates continue to fluctuate. These rates were reasonable in November 1997.
Many small business people have begun sites with expectation of riches without working the numbers first. You'll want to wait to sell advertising until you have enough traffic to make it worth your while.
Software
To develop your site to generate revenue you can either contract with a banner advertising agency which will take care of all the details for you for a fee, or you'll need to purchase banner ad serving software, sometimes known as a random banner rotation program. Prices range from free to $20,000+. Mark J. Welch gives links along with candid comments concerning such programs.
For our site we selected Central Ad Pro 3.0J by Brian J. White (US $159 plus $30 installation), which allows for excellent banner delivery using cookies, even though our Web hosting service does not allow Server Side Includes (SSIs). This package allows the site owner to maintain accounts for multiple advertisers, as well as deliver ads to separate groups of Web pages on a site, or even to deliver ads to multiple external websites. It tracks and graphs page views, click-throughs, and click-through rates, and offers advertisers the ability to view statistics for their account at any time with a password. In addition, it allows the website owner to schedule advertising by date, number of views, number of click-throughs, or in a combination of ways. You can also control the rate at which specific banners appear. We've found it to be a fine product for the money.
The HTML code, for example, for the banner on this issue of Web Marketing Today (Web version) http://www.wilsonweb.com/wmt3/issue38.htm looks like this:
<IMG SRC="http://www.wilsonweb.com/cgi-bin/rfwilson/getimage.cgi/WMT-wmt38?GROUP=WMT" WIDTH=468 HEIGHT=60 BORDER=1 ALT="Click here for more information from our sponsor!"></A>
When a visitor views the Web page, a CGI program getimage.cgi displays an appropriate banner, and then sends a temporary cookie so the viewer doesn't see the same banner on other Web pages more often then the website owner has programmed for. (I believe cookies must be used responsibly, but are here to stay, since they are necessary to power nearly all the banner software and most of the shopping cart software on the Web.) If the visitor clicks on the banner, then a CGI program redirect.cgi links the visitor to the advertiser's website.
Of course, it is possible to have banners on your pages without using banner serving software, by means of a simple hypertext link under the banner. But then the HTML code for each individual Web page would probably need to be changed when the banner changed (unless you are using SSIs), and tracking of page views and click-throughs would require laborious study of access logs.
Rate Card
You'll also need to develop a rate card which describes to potential advertisers what they need to know about advertising on your site. Our site, for example, lists our rates online at http://www.wilsonweb.com/ads/ and appeals to companies advertising to people desiring to market their business on the Web. A rate card should cover these items:
Rates. What is your CPM rate? What is the minimum number of page views an advertiser can contract for? Do you give discounts for longer contracts? Do you pay a standard 15% agency commission?
Size(s). What size banners do you allow? Industry standards now support only two sizes: 468 x 60 pixels and 234 x 60 pixels. What is the largest size in bytes? Many sites limit size to 7K to 10K to keep downloading times at a minimum.
Traffic. How many page views per month do you have to sell? How many different visitors per month visit your site?
Auditing. Is your site traffic audited by a third-party to insure accuracy of reporting and charges? Smaller traffic sites may not find this cost effective.
Audience Profile. What kinds of people visit your site? You'll need to survey visitors to collect demographic information such as age, gender, interests, business, income range, etc. Advertisers need to determine whether your site is a good match for people needing their product or service.
Selling your Advertising Space
It's one thing to offer a great product or service. It's something else altogether to sell it effectively. Unless you're prepared to aggressively market advertising on your site and negotiate with potential advertisers, you'd be wise to enlist the services of a Web media agency. You'll find a number of businesses linked to resources at the end of this article, and some good ones among our own site's advertisers.
If you decide to sell advertising yourself, you'd be well advised to list the availability of your site at some of the ad placement sites (found in resources below) in order to stimulate calls from potential advertisers or media buyers working for them.
You'll need to take down your hammock and get to work if you expect to earn money selling advertising space. But if your site is a good candidate, why don't you get started? Hammock weather is over anyhow.
Related Resources
There is a huge literature concerning banner advertising. You'll find links to over 135 articles in the Web Marketing Info Center's "Banner Ad Page", of which 19 were added this month alone -- an example of how Web Marketing Today keeps you up-to-date each month with the latest articles and trends.
Sidebar: Should You Sell Banner Advertising on Your Site?
Consider these questions:
Will sales of banner ads bring in enough to compensate for the hassle, work, and extra costs involved?
Will banner ads from other businesses distract substantially from the purpose and message of your own site?
Will banner ads on your site take people away from your site when you've worked so hard to get them in the door?
The answer is "Yes, to a small degree." If the average click-through rate is 1% to 2%, then on any given Web page, the chances are low that a visitor will leave your site via the banner. If your average visitor goes to four pages on your site, and the click-through rate on a banner is 2%, then the chances of that visitor leaving your site to go to your advertiser's site is substantially lower than 8%, probably half that. If that exit rate is satisfactory, then go for it.
What if you don't have many visitors yet?
For sites with marginal potential for advertising sales, you might try Link Exchange, which at the very least will give your site greater exposure, and could possibly pay you something for ads on your site.
