Modern Banner Ad Price Evaluation

As posted earlier about the traditional method of banner ad pricing evaluation, today I'll take you with the modern methodology of estimating spend & targets while going for banner ads advertising.

For example, the top 100 or so Web sites can charge a premium because of their size, but we can opt for the option called targeting. For example, if you want to sell a mobile, you can advertise on the Univercell Mobile articles and get a targeted audience for your ad, which will typically increase the click-through and response rate for the ad. Recently Yahoo and many search engines target their banner ads to the search query people type in, and they charge more for these targeted ads, which is also called as Contextual Advertising. But for most other Web sites, there is very little money to be made from banner ads.

Conclusion

In order to charge more than the average spend per thousand impressions in this digital era, Web sites have to offer ads that follow either of the below statistics along with many different advertising formats and experiments to carry on with:

• Have a lot more branding power


• Get a much higher click-through rate

Banner Ad Price Evaluation

Understanding Banner Ad Pricing

Let's say that a publisher wants people to buy a mobile, and hopes to increase sales of the mobile through advertising. The publisher has budgeted $3 per mobile for a particular brand to spend on advertising. If the publisher is paying $30 per 1,000 impressions for banner ads and purchases 100,000 impressions for $3,000, here is what happens:

• The banner ad appears 100,000 times.



• Let's say the response rate is 10 clicks per 1,000 impressions, so 1000 people click on the ad during the time the 100,000 total impressions are running.



• If two percent of those 1000 people actually purchase the particular brand mobile, that results in 20 purchases.



• The publisher had to pay ($3,000/20) $150 for each mobile purchased through that ad.

­ Obviously, paying $150 to sell one mobile is not a good economic model for a publisher, especially since the budget is $3 per mobile.

Conclusion

For banner advertising to work for the publisher, the publisher would need to pay 30 cents per 1,000 impressions, rather than 30 dollars, which is the traditional method. Check out the next post to understand the modern pricing strategy...