How Do You Measure Success with banner ads?

You'd think that success would be easy to measure, but advertising has never been a simple art. Ad agencies have their unique self-serving spin, advertisers set their own objectives, and banner ad designers see something else again. Here are some of the factors involved:

Cost Per Sale. A much more important figure is the actual cost of making the sale of a tennis racquet. In the final analysis, you don't care how high the CTR is if it doesn't result in a proportionate number of sales. What complicates this is the fact that your banner ads on the World Tennis Ratings site may actually sell fewer tennis racquets than those on NCAAChampionships.com. You can only make this determination when you use sophisticated tracking methods using cookies to separate the lookers from the buyers, and determine which sites and which banner ads had the best result. Most ad serving software, ad networks, and affiliate program software and services provide this kind of information. You can also determine this by coding all banner ad links so they can be tracked with Google Analytics.

So what does it cost to get a sale using banner ads

Your results will vary, depending upon where you advertise and the effectiveness of your creative. Here are some arbitrary numbers to use in our calculation:

Let's just say that you are paying only $2 per 1000 impression of your banner ad. Let's also say that of that 1000 impressions, 2 people clicked through:

• CPM = $2
• CTR = 0.002%
• Conversion Rate = 2% (from your landing page)

Cost per Visitor = CPM / (1000 x CTR) Or $2.00 / (1000 x .002) = $1

In our example, the $2 you spent to show the banner ad to 1000 people netted you 0.002% or 2 visitors to your site. Each visitor cost you $1 to get there. Hmmm. Now let's calculate what your advertising cost is per sale. At a 2% conversion rate from you landing page it would take 50 visitors to make one sale.

120 X 600