|
by Zsolt Kerekes, editor
StorageSearch.com |
"What's a Good Click
Rate for a Banner Ad?"
As a publisher I'm often asked
that question by my advertisers. "Is 3% good?" I was asked
just before writing this article... My answer is not a number, or percentage. "It
depends on your market and your products."
(In January 2010
- the highest performing SSD banner ads running on my publications are getting
between 1.0% and 4.5% click rate. Generally static banners
perform better than animated - because the entire message is seen at once.
Depends on the message of course... see more about this in -
Think of Web
Ads as Signposts.)
This is
ACSL's 13th year
as a dotcom publisher, and in that time we've run countless millions of banner
ad impressions. So we have plenty of data. Let me take you through the math.
Real
life banner click rates on STORAGEsearch
and
SPARC Product Directory
typically occur in the range 0.5% to 7%. The average (all clicks divided by all
impressions) is over 1.5%. Incidentally, we've seen click rates rising during
the last few years, as advertisers get more responsive to the feedback we
supply, and design ads with better targeted messages which take into account the
already segmented nature of our readerships.
Cost per click. On
our sites, an advertiser buying for example 100,000 impression price point, pays
2 cents an impression. If we assume a 1% click rate, then the cost of a click to
your web site is $2. If we assume that just one in a hundred of those visitors
(1% of the 1% visitors) are convertible into customers, that's a customer
acquisition cost of $200. (That's not the whole story, because there's a
branding benefit and we see that running banner ads increases the effectiveness
of classified web ads on the same sites.) But let's just work with this $200
cost.
Is it worth it? For many of the products advertised on
our sites such as rackmount solid state disks, RAID systems, rackmount Sun
servers, military systems etc, a typical entry level system price ranges from
$10,000 to about $100,000. So it's easy to see that this is a sustainable
process. And actually, most customers are in the market for multiple systems.
But how does this work out for lower cost products? - such as
cables or adapter cards, where the average price of the product can be in the
range $10 to $500? Surely, you think, our advertisers must go broke, if their
customer acquisition costs are so high. Well, I can reassure you that they
don't. And there are 2 reasons why.
- most of the advertisers for the lower priced products run targeted banner
ads, so their typical click rates are in the region of 3% to 4%. Let's say a
typical customer acquistion cost of about $50.
- this is the important part! The economics of banner advertising (as
with all direct marketing) are based on the lifetime value of the customer.
Advertisers of these lower cost products have often commented that an individual
sale of SCSI cables, adapters, GBICs or whatever to a new customer who may be a
reseller or systems integrator can be over $20,000. And most end user
organisations are in the market for mutiple products, either in one order, or
over time.
As a publisher, I try to understand the economics of
potential new customers, and I often decline advertising orders, if the product
profile is that the customer just buys one off a low value product, with little
or no repeat potential. I would waste my time by accepting new customers with
that kind of business, because it won't be sustainable.
So going back
to the original question..."What's a Good Click Rate for a Banner Ad?"
the answer is - it depends on your product, your market, your customers, and
just as important, the characteristics of the publication you advertise in. It's
worth paying $2 a click for the right customers.
...Later:- Many advertisers say that the leads they get from
our sites are higher quality than those from Google or other publications. They
look at more pages and are more likely to generate a request for quote.
Maybe
that's why in the summer of 2007 - all our projected banner capacity for the
following 6 months had already been sold to existing advertisers.
...Later:- if you really want to see something which goes a
lot deeper into banner ad effectiveness - take a look at the PhD thesis of Dr.
Michelle Anne Toon -
A Study Of
On-Line Use and Perceived Effectiveness of Compliance-Gaining in Health-Related
Banner Advertisements for Senior Citizens (pdf) - which includes a quote
from my article.
As I was being dozy - it took me 8 years to discover
that paper - which is dated December 2002. Hopefully you'll do a better job
looking at who links to your own sites. |
|
|
| Later...
More about banner ads.................................. |
Sometimes
there is a problem with the design of the banner ad itself.
The
message is not clear, or maybe the design interferes with the message. Usually
testing a couple of design iterations will result in a workhorse solution
which can also be run on other sites. Now and then, however, the process just
gets stuck in a rut.
In January 2003 we had a new advertiser whose
initial banner ad (designed by an agency) didn't work very well. It looked OK to
me and to our advertiser, but the click rate (less than 0.1%) sucked. Our
readers just didn't get it.
3 agency redesigns later, and the banner
still wasn't working.
It wasn't the agency's fault. The banners looked great - but maybe
they were trying to say too much.
So I decided to design a banner
myself, using the knowledge I had about the advertiser and their positioning.
The new design is getting a 1.2% click rate. Not very high, but good enough
for this promotion.
This was a situation where, we as a publisher, had
to step in and help. It doesn't happen very often, maybe once or twice a year.
I've tracked the performance of over 4,000 banner designs. That
experience is always available to help our customers understand what's
happening.
How much did we charge this customer for designing a legacy
banner?
Nothing. It's all part of the service.
Even later...
our customer's design agency took our design of banner and tweaked it. This new
version is now performing best of all.
More recently - in Q4 2007 - I helped an advertiser increases
its banner click rate from 0.6% to over 1.3% (and 5 months later - in Feb 2008
- it was still getting the higher rate).
Better still - the customer
signup and conversion rate at their end went up by a much bigger factor than
that doubling of the click rate alone implies. Because the new banner message
was much more relevant to their target customers.
...Later:- in January 2009 - I had an advertiser who was happy
with the click rate for their new banner. But I suspected that they could do
much better - because of the high interest in that subject in our editorial.
I
suggested some simple changes which reduced the complexity of their banner,
retained the text of their core message, and increased the click rate to 6x
the level before.
Nice to know I still have the knack of understanding
micro communications.
That's the best way to think about banner ads...
micro editorial with guaranteed delivery. So it's worth paying more
attention to how readers perceive them. Leaving this important task in the hands
of graphics designers is lunacy. Yes - they should do the implementation - but
the direction has to be given from the highest level marketer in your company.
Because what you learn from testing banner ads - often results in you having to
change the way you talk about your company in other places... your web site,
your PR.
The success you can get from reapplying what you learn from
testing banner ads back into all your corporate communications means that its
value is orders of magnitude more than you think. | | |
|
|
| . |
| Later - how do banner ads
compare with Google ads? |
I've been running our own proprietary web
ads since 1996.
I was surprised to get a phone call from Google
about 5 years ago to ask if I was interested in running their ads. They could
see from their search data that we had a lot of content and readers.
But from what they said about industry average ad rates I didn't think that
Google ads would be a good business model for my publications. So I declined
to pursue that idea at the time.
But in 2009 - after reading a book
about how some web 3 businesses had funded themselves using Google ads instead
of venture capital - I decided my earlier prejudice against Google ads might
be wrong. So I decided to test this theory.
Click rates below are
based on testing in StorageSearch.com in the 4th quarter of 2009.
AdSense for Content - 0.37%
This used the same size
ad footprint and same placement as our banner ads.
AdSense produced
much lower click rates than banner ads.
Also the value of the AdSense
ads was 2 orders of magnitude lower than we get from sustainable banner ads.
Part
of the reason for the low click rate - is that Google is not as good at
delivering contextually relevant ads - as you would expect from reading its FAQs
pages.
Another explanation may be - that due to its preliminary poor
economic results - I didn't invest much time in understanding how to improve
the performance of the AdSense ads.
AdSense for Search - 4.14%
This click rate is similar
to the best results we get for running banner ads.
But there are 2
downsides.
1 - the revenue delivered from AdSense are an order of
magnitude lower then our other ad alternatives.
2 - the footprint in
an AdSense ad is a larger percentage of the browser area than a banner. But the
click rate is the same. Therefore the economic performance - compared to running
3 or 4 banners on a single page to get the same ad area - is lower.
Conclusions - re Google ads
Google ads are not a
viable business choice for our publications. But I will continue low level
testing - mostly of AdSense for Search - to see if we can get better results.
Conclusions - re all types of ads
Getting high click
rates - for any type of ads - in the region 3% to 4.5% are a sign that
publishers are running ads which are relevant to their readers.
My view
is that it is better to run no ads at all on a page - than to run ads which are
likely to irritate my readers.
Click rates are a useful indicator in
this regard for a publisher.
But I always remind my advertisers (and
they remind me) that what counts - is the change in business activity which they
see - related to their advertising. | | | |
