Aspects of Web Advertising by
- publisher of
words of explanation. This article was written and published in February 2000
- before Google sold its first ads. So if you're looking for details of how to
game Google you'll need to look elsewhere.
Having said that - you might
still be interested in some parts of this article.
One reason is that
more than 10 years after writing it - some of the proven advertising
communications concepts which I had described in this article - and was
running before Google (the company) was even founded - were adopted in ad
formats offered by Google itself.
Nowadays marketers think that Google
is "internet advertising". But many of the concepts already existed
in other places years before. My article was written from the perspective of an
online content publisher who had been trying - since 1996 - to encourage my
customers to aim higher when thinking about web ads.
The key point
about all online ads - is they are a communication which should be designed to
engage with the brain of the audience.
Does web advertising work?
Some quite distinguished experts have said "No,
it doesn't." They include:-
Kotler who wrote Principles of Marketing, and is one of the world's leading
OK, you could disregard his opinion by cynically
saying "what does this guy know about the web anyway? And maybe he's
just inserting controversial quotes about the web into his 1999 press
interviews to help sell his latest book."
Fair enough, but Jakob
Nielsen, whose Useit.com/alertbox
is one of my own recommended web marketing bookmarks said in September 1977 that
Advertising Doesn't Work on
the Web, a view he reaffirmed in his July 1999 article
Web Research: Believe the
Data. In my opinion, Jakob Nielsen is one of the world's leading
experts about the web and successful web site design. Nevertheless, I disagree
with both of them, on this question, as you would naturally expect, because if I
didn't, there would be no point in discussing web advertising any further, and
this would be a very short article indeed.
- in an April 2003
article Jakob Nielsen changed his mind about this and started writing about
the virtues and possibilities of the "new" style of classified
advertising, that we started running back in 1996...
My own experience
is that I have seen web advertising work very well for the last five years, in
my own neck of the computer market (the Sun Microsystems compatible server
market). At this point, you the reader, might get cynical, and say "Maybe
it works OK for publishers selling web advertising, sure I can believe they make
money, but what about the companies who are buying the advertising space?"
feedback from many of my advertisers is:- "Web advertising is now our
biggest source of new leads, and the leads we get from your site spend more, on
average, than the leads we get from other sources." In fact the customer
renewal rates on my site have been over 95% for a couple of years now, and as
most of my advertisers typically seem willing to spend much larger sums year on
year, there is enough evidence to convince me that web advertising can work
So how does this correllate with Kotler and Nielsen who both
say web advertising doesn't work. Some people are saying one thing, while others
are saying another. My answer is simple.
- Well executed web advertising, on well targeted media works very
- Poorly conceived web advertising, on unfocused and untargeted media
works very badly (or not at all).
My guess is that these two esteemed marketers are talking about the web
advertising market as a whole, and not the potential of the concept itself.
This is very similar to the experience of traditional direct marketing, and
you only have to look in your mail at home and at work to see that the vast
majority of companies which use direct mail as a selling medium are actually
incompetent in their execution of it. They survive this incompetence because
another part of their organization is, in effect subsidising this activity.
Maybe it's their direct sales force, or maybe it's their reseller channels...
However, it is important to make web advertising work for your organization
because it can result in new customer acquisition costs
50 to 100 times
lower cost that traditional forms of direct marketing, and advertising
in other media. That's a difference which can't be ignored. It means that even a
puny competitor which executes web advertising effectively can outperform a
competitor which is more than 10 times its size. Alternatively, a web focused
competitor can destroy a similar sized competitor by using its web marketing
advantages to acquire and retain customers at lower cost, while also reducing
its product pricing.
We all know companies which are poor at marketing, however, that doesn't
mean that marketing planning, market research and other marketing activities
should be ignored. In the same way, the concept and potential of web advertising
should not be dismissed, just because most companies are doing it badly.
you should use banner technology on your own web site|
If your own web site does not include the technology to run
your own banner ads on it, you should get it redesigned to support this feature
as your #1 priority.
I'm not referring here to the style of banner ad
which you run on other people's sites to attract new readers.
I'm talking about using banner ad technology for a number of different purpose
- making viewers aware of other content on your site
In the example
of an editorial banner ad shown here on the right - I've added a line around it
so it stands out here in this context - discussing ads.
the line - such messages can be embedded anywhere in your site.
- measuring the interest levels (in real time) of different subjects or news
items which you add to your site
As a publisher I run what I refer to as "editorial" banner ads on
nearly every page on my web sites. This uses a simple graphic, which is nearly
always the same. Only the text, which is a 1 to 4 line simple message ever
changes. As a publisher, I get the following benefits from this:-
- the editorial content of every page changes every time the page is loaded,
which makes the web site more interesting without needing massive daily redesign
- I can use push technology to announce a new feature on the web site on
hundreds of pages within a few minutes of thinking of the new idea. The new idea
can be a new article. Or if I have several news stories and don't know which one
to lead with, I'll try 2 or 3 of them for a few hours, and then recode the home
page to include the headline which reader clicks have shown to be the most
- The banner statistics tell me, typically within 24 hours, which subjects
are good ideas, and which ones I should drop
If you as a marketer within your own organization get this
technology running on your web site, you can, just spending 15 minutes each day,
analyze comparative sensitivity to different wording which promotes new ideas
and concepts, in fact you have the technology to do real-time test marketing of
any new product idea. Use it for:-
- signposting articles, white papers
- promoting your latest press release
- telling customers that you changed your pricing
- see which message you should use in your next advertising campaign
Some messages, like those about articles, can stay on the banner mix for
several months. Others, such as real-time news should be changed every day.
I retrofitted editorial banner ads into my own site(s), so I had to work
within the constraints of the real estate which was already there. I use a
static GIF file which is 220 pixels wide, and 80 pixels high. The text area has
the same background color as the web site, so that the text is not boxed in.
These banners run on the top left hand corner of each page at the same level as
the web site's own branding image.
You should also run some of your advertising banner ads on your own site.
However, in that case the banner slot should be a standard 468 x 60 slot,
preferably at the bottom of each page. That reinforces the banner ads which
readers see on other sites, and enables you measure in a controlled way, which
banner ads work better. Don't direct them to your home page, but to the page
which is most relevant to the message on the banner.
Editorial banner ads are the most powerful technology which you, as a
marketer, will use on the web in the next few years. Email your web
designers now and get them onto it. Make sure that the tools they give you let
you design and submit your own new banner within no more than a couple of
minutes. Otherwise change the web design team. The marketing department should
be the one in control of this part of your web site, regardless of the high or
low technology used everywhere else.
In most markets, classified advertising offers you
the best targeted advertising opportunities on the web. It's something which
many of the marketing people I speak to, don't clearly understand. In my own web
publications, we offer both classified advertising and banner ads. Advertisers
can use either method on its own, or a mixture of both. Some examples of
classified advertising in the computer market include:-
- the promotion packages offered to members of most
industry trade associations.
Many of these trade associations don't necessarily see these membership schemes
as "advertising". But that's a perfectly valid way of looking at them.
If you pay your membership fee, you get a certain amount of visibility on these
- any logo, company profile or product description on the
SPARC Product Directory is
actually part of a classified advertising package.
The main aspects of classified ads are:-
- they contain useful information (unlike most banner ads). The information
is usually a company profile or a product description
- the classified ad is bought on a time basis for example "1
year" instead of a number of views or clicks basis such as a banner
- the content of classified ads is regarded by most viewers in the same way
as editorial. That's because they correctly assume that every company
pays the same dollar amount for the same quantity of visibility. The "ads"
are usually information that the viewer is actively looking for. That's why they
came to the web site in the first place.
- the company profile or product info, is on the same web site as the link to
it. That means the publisher gets the branding benefits of the viewer seeing
this info. The publisher can also choose to run banner ads on these classified
pages. That's quite different to banner ads or "pay per click"
search-engine listings (such as GOTO.com) in
which the information is on the advertiser's site
Classified ads are good for advertisers, because typically the pricing
models, which originate in the pre-web era, are usually unrelated to banner ad
pricing. For example if you want a qualified reader to see your new product info
on the SPARC Product Directory,
the classified ad will typically cost 10 times less than achieving the same
objective with a banner ad.
Classified ads are also good for publishers, because they contain rich
content which helps to attract more viewers.
There are, however, 2 main advantages that banner ads have compared with
- Control. You can buy more impressions of banner advertising, limited only
by your advertising budget. Whereas once you have set up your classified ad, you
are totally dependent on how successful the target publication is at attracting
more viewers, and, just as important, the total number of advertisers in
your own product category.
- Portability. Once it has been designed, the same banner ad can be run on
multiple web sites with little or no need for customization. In contrast,
classified ads are, by definition unique to the web site on which they are
running. Therefore more marketing inputs are usually required to set up
classified ads. (On my own sites, we offer customers the free option of
creating the classified ads from the content we see on their own main web site.
But that's a service level to which most other sites do not yet aspire.)
In conclusion, your company will get a lower cost per lead from classified
advertising, but a larger reach into your target markets from banner
advertising. You need to use both. In the long term, new types of classified
advertising products will be developed by publishers, specifically for the
mature web advertising market. These include
and sponsored articles, some of which we look at below.
What will happen to web ad pricing?
When I updated my business plan in the early part of
1999, which was disclosed to current and potential advertisers, the
question of what would happen to web ad pricing, and in particular, banner ad
pricing was of great interest. My concern at the time was to provide early
warning to my customers of the trends they would see, and help them include
these factors in their marketing budgets for the year or so ahead. my analysis
and conclusions haven't changed. When I first started selling web advertising in
January 1997, the market was new, and the price was basically whatever you
thought you could get. Early web publications were mainly cushioned from making
adverse pricing decisons either because they funded by venture capital, or they
had alternative income streams from print advertising or mailing list rental.
The factors which affect banner ad pricing are no different to any other
- factors in the external market - such as competing products
If we look at specifics:-
- The number of new web advertisers will grow at a faster rate than the
number of web viewers (or readers). The most mature segment of the web
advertising market is the computer segment focused on Sun Microsystems and
associated SPARC technology. But even in this market, in Q1 2000 less than 5% of
resellers actually spend money on web advertising. By 2002 it will be 100% (of
those which are still in business). If we look at the number of advertisers
that translates to a 450% annual increase. But if we measure by dollar value,
the trend I have been seeing is that web advertisers start to switch more money
into web advertising after they have had a year or so of good experiences with
it. If we take the 2 factors together, the demand for web advertising (in this
market which is much further down the learning curve than any other web
advertising market segment) could easily be greater than 5,000% per annum.
- If we look at the supply side. The rate of reader growth, in this market
segment, even assuming that the market grows at a healthy rate, is unlikely to
be above 50% per annum.
- In a mature business to business market, the trend on the web seems to be
that a greater percentage of readers get channelled through a smaller number of
major web sites (or portals) than would be the case with physical media such as
print. So the number of targeted publications which a potential advertiser can
use to reach a critical mass in their market, is actually reducing.
What does this mean? - In the business to business world, demand for
advertising so greatly exceeds supply that most publications do not need to work
at getting new business. It will come to them anyway. What happens next depends
on the strategy of each publisher. In the long term it makes sense for
publications to retain customers by providing a good channel to their market.
Also, the introduction of high added value and customised advertising products
(described in other parts of this article) can create unique opportunities for
synergy in which the publication actually becomes an integral part of the
advertiser's sales and marketing force.
In the consumer world, the critical factors in my view are:-
- huge growth in sites which carry consumer ads - everyone wants to be
the next Yahoo
- very poor results from consumer advertising - due to poor targeting and
lack of synergy (most of the time) between advertiser, publication and reader
The result in the consumer world will be that banner ad pricing will drop to
a fraction of what it is today, because there's a lot of unsold inventory on
consumer sites, and the results advertisers get are so poor. In Q1 2000, there
is already a 10 to 1 difference in published banner ad rates between high end
BtoB and consumer publications. The real difference, if you're actually
spending money is more like 20 to 1. These 2 markets are quite different today,
and likely to remain so until the venture capital which props up many of these
consumer sites starts to run out.
Why you should advertise
Your engineering team has just written a wonderful
white paper which describes your latest technology. Or your marketing department
has just written a market report which links together the disparate parts of
your market and shows why your company is the logical lynch pin, or next leader.
You want lots of people to read so what do you do?
Traditional approach - pre 2000
- Try to be nice to some editors in industry leading journals, in the hope
that they will publish it (or a story about it).
- Put a copy on your web site and hope someone will read it
- Print thousands of copies and distrubute them in your mailshots and
- Run the article as advertorial in a printed magazine. But how can you
be sure that anyone reads it?
New approach - you don't have to be nice to editors any more
- Run an editorial banner ad on your own site, which promotes the article.
This will show you how much interest there really is.
- If there's enough interest then consider advertising the article on other
using banner ad technology to promote the article
- the banner should include a text extract from the article itself as part of
the image design.
This is a proven concept which I've tested on many
millions of readers. It's just another way of telling readers where they can go
- if they're interested.
Some tips about banner ad design
- Always design at least 2 versions of your banner
ad. Run both on the same site at the same time. After a few days it will become
apparent that one design has a higher click through rate than the other. Switch
the rest of the ad over to the better design. In some cases, the difference can
be the text, the color, animated versus static (static can sometimes work a LOT
better). In most cases, even I can't predict which will work best for my own
customers. But running the new ad for a few days samples the behavior of
thousands of target readers. They will tell you the right answer. I've seen
differences more than 300% between different banner designs for exactly the same
product from exactly the same company. Don't stop experimenting just because
you're already getting 1%, or 2%. Some of my advertisers have been getting click
through rates over 5% consistently for more than a year. One recent advertiser,
using well targeted options has been doing even better than that but for a
- Not all rectangles look the same. If you know the background color of the
main site your ad will run on, you can use this information to make your banner
ad real estate look different. One of my advertisers once used a diamond shape.
The shape below which attracts readers to our STORAGEsearch site has been run
millions of times and still works after more than a year, when used on a white
- If you're running a banner ad on a news site, instead of running your logo
and mission statement, which will not work to get you many leads anyway, try
creating a banner press release instead. For example:- "News release:-
March 2001 - XYZ has announced a new product range of XYZ google adapters".
The banner should link to the press release on your own web site. You can
similarly announce a new article or white paper on your web site. The reason for
using a news banner on a news site, is that the viewers are looking for
news stories. Readers behave differently when they are in different search
modes. The same banner ad will not work the same way on a news site and a
search-engine. If they do, the chances are that they are both working badly.
- A small banner ad, which takes up 5K bytes will load 6 times faster than
another which is 30K bytes. We all know that the speed of viewing the web
changes dynamically with load factors, even if we are using the fastest
technology at our own end. Most viewers will not see your cleverly constructed
message in the 30K banner ad design, and your click rate will be a lot lower in
Everything else which I forgot to
If you've reached this far, you may be surprised
that I haven't even mentioned subjects like:-
- search-engine listings:- are totally irrelevant in today's BtoB market.
Whether you are #1 or #200 on general search-engines makes less difference to
your web focused customer acquisition strategy than implementing successful
advertising strategies as described above. For one explanation of this see the
top 100 search terms on searchwords.com.
If you look at the maths of a general search-engine with 10 million visitors a
month, and divide that by the 10,000 words used by an average English speaker
you get an average of 1,000 searches per word per month. Common (consumer) terms
will get more, specialist (BtoB) terms will get less. So if the whole search
engine is getting maybe 300 inquiries each month in your business segment,
that's why you can safely ignore it unless your business is very small indeed.
- click-through ratios:- are a useful comparative guide between similar web
sites. But is a 5% click rate on a kindergarten web site worth more to your
company than a 0.5% click rate which focuses on high value buyers? Obviously
not, if your main business is selling computers, or cars or high value services.
See my article which analyzes costs etc -
What's a Good Click
Rate for a Banner Ad?
In the BtoB world establishing a direct relationship with the sites you
advertise on is really important, and your business will suffer if you
follow the traditional advertising practise of buying your advertising via
intermediaries. The main reasons are:-
- when advertising capacity is oversubscribed and goes on allocation (which
is continually happening on good sites) then you will be the last to know, and
will probably not get your ideal advertising slots.
- when new advertising products are being test marketed, they will typically
be tried out with advertisers who have enough of a good relationship for the
publisher to risk this process. That's very unlikely to be with an
advertising agency, because only a desperate publisher would try out their
newest sexiest product on an agency which doesn't have a long term commitment to
their client's market.
Where else can you look for good info about web advertising?
is simply marketing communication which has a guaranteed visibility level. So if
you study how to communicate better online - then your ads will get better too.
Good luck with your web advertising
About the author:-
I've been involved in
web advertising since 1996 as a buyer and seller. I love the interactive nature
of the web advertising business. Unlike traditional direct marketing, the
reward/risk ratios on the web are much higher, and the speed of creating a new
campaign and getting results can be measured in hours, instead of days or weeks.
It's still a new market, and everything will be different in a few years' time.
I hope you find some of the notes above stimulate some new ideas.