Banner advertisements have an average conversion rate (CR) of 0.25 percent.
Advances in technology have made measuring the effect of banner advertisements on Internet purchasing easier to pinpoint. Factors such as context, exposures, number of creatives (advertisements) and rich media can greatly influence sales. Analyzing industry reports and data can help advertisers develop successful banner advertising campaigns.
Industry Standards
Banner ads were the first visual marketing tools used on the Internet. Advertisers agreed to standard sizes early on--the most common size is 480 by 60 pixels--a practice that has been maintained by the Interactive Advertising Bureau (IAB). Besides creating industry standards, the IAB (ab.net) and eMarketer (emarketer.com) offer regular reports and studies that can help advertisers increase the success of their banner advertising by analyzing user habits and responses.
Monitoring Effectiveness
Advertisers measure banner ad effectiveness using database software through advertising networks, such as DoubleClick (doubleclick.com), and cookies, small files placed on a computer that record ad clicks and sales. Click Through Rate (CTR), the percentage of clicks on a banner ad that go to the advertiser's website, and Conversion Rate (CR), the number of shoppers who make a purchase in an online store, offer the most helpful ways advertisers measure banner advertising effectiveness. Industry research included in a 2002 study by Puneet Manchanda, Associate Professor of Marketing at the University of Chicago, has pinpointed an average CTR of 0.5 percent for banner ads. The CR from these banner ads is around 0.25 percent.
Beyond CRT And CR
While banner ads appear to have low effectiveness rates when analyzing CTR and the resulting CR, they have been shown to increase brand awareness and influence future purchase intent. Manchanda's study found that 14.3 percent of banner ads that left cookies on users' computers eventually led to a purchase. Therefore, banner ad effectiveness on Internet purchasing cannot be evaluated solely by CTR and CR.
Factors Influencing Effectiveness
According to Manchanda's study, the number of exposures, number of websites and number of pages a user sees a banner ad greatly increases purchasing. In contrast, exposure to a number of different creatives decreases purchasing. A 2009 study by Condé Nast and McPheters & Company found placing the banner ad in context (near related content) increases advertisement recall by 61 percent. Interactive, rich media ads have consistently proven to have higher CTR when compared with static banner ads, with a 2009 study by Ginger Rosenkrans of Pepperdine University showing an increased CTR of .33 percent.
Future of Banner Ads
Banner ads have long been the online advertising standard, despite questionable efficacy. However, advertisers are always looking for a better return and have been investing more money in new marketing methods, including mobile technology and social marketing. While banner advertising spending has declined by a small amount in 2009, according to eMarketer, expect advertisers to look for media with a higher return for their advertising dollars.
