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Banner or Pay-per-Click - Which On-Line Advertisement Suits Your Business?

Posted by Amit Kumar Chatterjee on: 2006-08-28 23:35:59

Self SEO > Online Promotion Articles

Banners are perhaps the oldest and most common mode of advertisement in the Internet. In its simplest form - it acts like a billboard, spreading a promotional message and helping interested visitors to visit concerned web-site.

Difference between a physical billboard and on-line banner advertisement lies in ability of the later to measure campaign effectiveness. Unlike traditional ad media like TV or print where measuring audience response is difficult - its possible to obtain clear and accurate measurements of success or failure of on-line ads through web traffic analysis.

How good is banner advertisement for your business ? Should you adopt this known and trusted method or prefer new ones like search engine based Pay-per-Click (PPC) advertising ? The answer lies in your requirement and an understanding of what banner advertisement can deliver.

Let us discuss various concepts associated with on-line advertisement and analyze how banner advertisement works.

Banner or Pay-per-Click - What Kind of On-Line Advertisement Suits my Business ?

An Organization usually creates online advertising campaign for achieving following goals:

  • Building brand awareness
  • Increasing website traffic
  • Creating leads and sales
You need to analyze your precise requirements and prioritize the objectives of planned ad campaign. If the objective is brand building or pure promotion - banner advertisement is ideally suited. However, if you are more keen on leads and sales - targeted advertisements such as search engine marketing could be better option. In many cases - a mix of banner ad and search engine marketing could be the answer.

Key Concepts Associated with On-Line Advertisement

Before proceeding any further, it is important to understand a few key concepts associated with on-line advertisements in general and banner advertisement in particular.


Impression is a measure of how many times an ad has been viewed. How many people have viewed a banner ad or received an "impression" by seeing the ad - is a measurement of responses from the ad delivery system. Once a visitor has viewed a banner on a web page - an impression is recorded. Banner views are different from page views in the sense that there may be multiple banner views within one page view. There is another distinction between page view and banner view - some banner serving software do not count a banner view unless the visitor stays on the page long enough for the banner to be fully downloaded from ad server.


CPM refers to cost per thousand (M here stands for 'Mille' - the Roman numeral used to represent 1000). CPM is commonly used by the advertising industry to describe how many people have viewed the banner ad (ad view) or received an "impression" by seeing the ad. In other words, this is the price an advertiser pays for displaying his/her banner 1,000 times. For example, an advertising rate of $10 CPM, means the advertiser is paying $10 for every 1,000 impressions, or $0.01 for each banner impression.

CTR or Click-Through

When a visitor gets interested in promotional message of a banner, he/she clicks on it to learn more and is automatically transported to advertiser website. Every time someone clicks on the banner, it is called a "click- through," and the "click-through rate" is expressed in terms of percentage of users who click on an advertisement (i.e. ratio of ad clicks to ad impressions). In other words, click through ratio is an indication of effectiveness of the a banner.

How Advertiser Pays for Banner Advertisement

Universally, there are two modes of payment for banner ad -

  • CPM
  • Click-Through
In some countries like India - there is a third mode of payment based on duration of time a banner is hosted on a web-site. Typically, special server-based software called 'ad-server' rotates banner ads in specified places of a web-site. It also keep track of impressions, click-thorough and other vital statistics. In CPM mode of payment - advertiser pays for number of impressions based on an agreed CPM. For example, if a site charges US$ 9 per CPM - for $450 the advertiser gets $450 / $9 CPM * 1000 = 50,000 impressions If percentage of click thorough is 2 - 4%, advertiser may expect ~ 1000 - 2000 new customers visiting his/her web-site. This is apart from brand building based on number of impressions. In Click-Through mode - Advertisers pays a fixed fee for every click, no matter what is the number of impressions. In time-based banner advertisements (typical in India), advertiser pays a fixed fee based on monthly or quarterly rate, irrespective of the number of impression or click-thorough.

Types of Banners Advertisements

Traditional banner ads were static in nature - usually a .gif or .jpeg image file. With technology advancing - new modes of banner ads appeared in ad scene. Following are some of the popular modes of dynamic banner ads

  • Expanding - Banner gets bigger on clicking - often have a button labeled "Expand". Rather than jumping to another website - these banners simply open up and reveal more information
  • Animated - Common mode of banner ad these days. However, too many images/messages may render such banners hopelessly large in size, slow and downright irritating. Exercise caution on banner design
  • Drop-Down Menu - These have embedded HTML and allow the user to choose options from a drop-down menu. This mode of banner is ideal for co-op advertising where several businesses can advertise together
  • Interstitial - These appear in a separate window as the website loads. These ads often contain large graphics, animation, and streaming presentations.
  • Java, Flash, and Shockwave - These allow for rich media presentation including video and audio. Common browser toolbars such as Alexa, Google etc. suppress this type of banners
  • Floating Ads and DHTML - These banners float over the content a website and generally perceived as intrusive, although they do get a high click-through rate.
  • Unicast - These are just like little TV ads that run in a separate window.
Checklist for Banner Designers

Here's a few things to keep in mind while creating banner ad

  • Keep it Simple: Stay simple. Don't get too complicated with heavy text and confusing colors.
  • Make it smaller in size: preferably under 12K. This way - the banner will be quick to load.
  • Make it Easy-to-read
  • Always use ALT tags for text display on those surfing without images
  • Verify that the banner clicks-through to the appropriate page on your website
  • Limit your use of animation
  • Include a call to action (e.g. Order Now, Visit Web-Site etc.)
  • Test your banners in different browsers at different screen resolutions.
  • Get your web designer to make your banner ads for you in a variety of standard sizes if you are not experienced in advertising.

Lack of targeting and visitor apathy are two major drawbacks of banner ad campaigns. Because of large scale use or misuse - visitors today treat banners as necessary evil and pay little attention. Click through rate of banner ads are much lower compared to other forms of on-line advertisement such as targeted search engine marketing. However, banner ads are more effective in brand building and work very well when the creative is attractive and ad delivery systems can do some targeting.

Amit worked in blue-chip Indian and MNCs for 15 years in various capacities like Research and Information Analysis, Market Development, MIS, R&D Information Systems etc. before starting his e-commerce venture in 1997. He writes regularly for Great Indian Bazaar - export import trade point & business directory serving exporters, importers, manufacturers, buyers and sellers since 1997 You may find more articles by Amit at FAIDA - Newsletter Articles on Export Import Trade Over Internet . Visit Amit's Blog at

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