Banner advertisements are graphic advertisements that appear on a World Wide Web site and are intended to build brand awareness or generate traffic for the advertiser's Web site. The term "banner" comes from the general shape for such advertisements, which is a short, wide strip that is usually placed at the top of a Web page. Since the first advertisements appeared on the Web in 1993, Internet advertising has grown into a $4.62 billion industry. Banner advertisements are the leading form of Internet advertising, accounting for 56 percent of all online ads in 1999. "Companies now find plenty of reasons to advertise online," Patricia Brown noted in "It has grown from a highly suspect promotional activity to a key component of corporate America's go-to-market strategy."

Although purchasing advertising space on Web sites can be expensive, it is an increasingly important marketing tactic for small businesses seeking to establish an online presence. Experts suggest that Internet advertising—whether through banners or through smaller, "sponsored by" notes on Web sites—is the easiest and most effective way to encourage potential customers to visit your company's Web site. In addition, sophisticated new Web technology allows small businesses to focus their advertising dollars on specific geographic or demographic groups. "Web-page sponsorship quickly increases traffic at your site by giving you almost instant access to the established viewer bases of other sites," Paul J. Dowling wrote in Web Advertising and Marketing. "Your company can—and should—sponsor as many Web sites as it can afford, but you should be somewhat selective about the sites you sponsor. Be sure the sites you choose are of a general nature or are in some way related to your field of business. And make absolutely certain they don't conflict with the goals and/or themes of your site."


According to Vince Emery in How to Grow Your Business on the Internet, banner advertisements can be quite expensive for small businesses. For example, it may cost several thousand dollars per month to place an ad on a site with a high level of traffic. The cost of Internet advertising is determined by the number of people who either see the ad or follow through to visit the advertised site. Some Web sites charge per thousand impressions, or people who visit the Web site and see the advertiser's banner there. A more relevant number for small businesses is the clickthrough rate, which is the percentage of people viewing the banner who actually click on it and visit the advertiser's site. The clickthrough rate helps determine the success of banner advertisements. Emery noted that a clickthrough rate of 1 percent is about normal, while 10 percent is outstanding.

Ideally, small businesses that advertise on the Internet will want to pay only for fully delivered banners. As Emery indicated, between 20 and 30 percent of people who surf the Web do so with the graphics feature of their browsers turned off. Turning off graphics helps speed up the transfer of Web pages to the user's computer, but it also turns fancy banner advertisements into empty boxes on the user's screen. Other Web surfers use the stop button feature of their browsers to interrupt banners in the process of loading. These people also save time but avoid looking at the advertiser's message. For this reason, Emery recommended that advertisers arrange to pay for banners that are actually seen by potential customers.

Paying based on impressions can also cause problems for small business advertisers. A certain Web site may boast that it attracts 100,000 visitors, for example, when this number actually represents only 10,000 unique users who visit the site 10 times each. At the same time, however, many sellers of Web advertising space are reluctant to accept payment based on clickthroughs. This arrangement can leave the seller vulnerable to advertising banners that are poorly designed and thus unlikely to generate interest and clickthroughs. As a result, many sellers will only agree to clickthrough deals with large advertisers who purchase a great deal of space. For small businesses, the best way to determine the true cost of Internet advertising is probably neither impressions nor clickthroughs. Instead, Emery recommends that you calculate the cost per sale or cost per lead generated through Web advertising in order to gauge the effectiveness of banners.


Another important factor in purchasing advertising space on the Web is deciding where to place banners so that they will be seen by potential customers. Emery noted that there are two main types of Web sites that generally sell advertising space: content sites and search engines. Content sites are the ones Internet users visit to find information of interest to them, such as ESPN Sport Zone for sports stories and scores or Travelocity for airline flight information and reservations. There are also thousands of lesser known sites specializing in every conceivable business topic or hobby. Advertising on most content sites requires small businesses to rent space for a banner, with the payment based on impressions, clickthroughs, or the time period in which the ad appears.

Advertising on search engines, like Yahoo or AltaVista, tends to be more expensive but also gives advertisers more options. For example, small businesses can buy space for a banner within a certain search category or even a specific search term. This way, if an Internet user searches for information on "fishing," the banner advertisement for a fishing tackle or sporting goods retailer could appear on the screen with the search results.

Many of the companies that produce Web browser software also allow advertising on their Web sites. As Dowling wrote in Web Advertising and Marketing, these sites can be a good place for a business to start building brand awareness. After all, many new Internet users receive browser software free with their PCs, and they may not be technically sophisticated enough to change the default screen from the software manufacturer's Web site. These users see the browser Web site every time they log on to the Internet, and advertisers can take advantage of this fact to gain the attention and interest of new Web surfers. A form of free advertising is also available from browser sites. Small businesses with exceptionally useful Web sites may be listed on the "what's new" or "what's cool" pages for a certain browser, which generally leads to an immediate increase in traffic for the featured site. It may also be helpful to establish links to your site on other, related sites.

Another option for small businesses is to place banner advertisements on the sites operated by Internet Service Providers (ISPs). Some providers, known as free ISPs, depend on advertising revenue—rather than user fees—to operate. Many of these companies provide free Internet access in exchange for detailed information about subscribers, which is then made available to advertisers. But as Brown noted in, advertising on established, fee-for-service ISPs like America Online remains popular as well. By charging users a monthly fee for access, these companies ensure that subscribers are likely to use the service regularly. Yet another option for advertisers are e-zines, or online magazines. Most e-zines serve highly specialized niche markets that may provide a good fit for a small business's offerings.

In The E-Commerce Book, Steffano Korper and Juanita Ellis provide several suggestions for small business owners to follow in deciding where to spend their Web advertising dollars. First, they recommend brainstorming to create a list of all the potential options. An important aspect of this process is viewing the company's product or service from a customer's perspective. Korper and Ellis suggest putting yourself in the position of a potential buyer and trying to figure out how you might look for such offerings on the Internet. Another way to target promising Web sites for banner advertisements is to input likely search terms into various search engines and look over the list of matching sites. Most Web pages that accept advertising include contact information for advertisers.


The final step in placing an advertisement on the Web is creating an effective banner. Even if a banner is well-placed, it will not attract the interest of surfers or generate traffic for your Web site unless it is well-designed. Emery noted that the best banner advertisements arouse people's curiosity and encourage them to take action. For example, a banner for an accounting service might say, "Click here to reduce the tax bill for your small business."

Emery also emphasized that the banner is intended to generate traffic for the company's Web site, rather than advertise the company itself. For this reason, he suggested focusing the banner's message on the single most compelling reason for potential customers to visit the Web site. It may also be helpful to mention any recent changes or additions to the Web site. Emery also wrote that many companies have been successful in using contests and offers of free goods to attract people's interest to banners. Finally, he noted that advertisers need to recognize that banner advertisements typically have a very short useful life. Most people will only clickthrough in their first few exposures to an ad; after that, it turns into the equivalent of wallpaper on the Web site.

Even the most effective banner advertisement will not generate customers or sales for a small business if the company's Web site is poorly designed. It is vital to make certain that your Web site is attractive and fully functional before advertising it. "If your company plans to spend a lot on advertising, make sure the investment is proportionate to your investment in the Web site itself," Dowling wrote. "Site content must be dynamic and informative to keep surfers coming back. Spending lots of money on advertising does no good if people leave your home page as soon as they see it."

A number of Internet sites exist that provide helpful information for small businesses interested in advertising on the Web. It is important to keep in mind that Internet technology continues to change at a rapid pace, which may eventually cause banner advertisements to disappear in favor of more interactive online ads. In addition to banner advertisements, there are a number of other ways small businesses can generate traffic for their Web sites. For example, you should be sure to include the company's Web address on brochures, letterhead, product packaging, TV commercials, billboards, and offline magazine advertisements.


Brown, Patricia. "It All Ads Up Online—Internet Advertising Has Another Banner Year Ahead." June 5, 2000.

Dowling, Paul J., Jr., et al. Web Advertising and Marketing. Rocklin, CA: Prima, 1996.

Emery, Vince. How to Grow Your Business on the Internet. 3rd Ed. Scottsdale, AZ: Coriolis Group, 1997.

Freeman, Laurie. "Web Ad Revenue Up Sharply." B to B. May 8, 2000.

Korper, Steffano, and Juanita Ellis. The E-Commerce Book: Building the E-Empire. San Diego, CA: Academic Press, 2000.

SEE ALSO: Reciprocal Marketing

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