Posted November 29, 2007 5:59 pm by with 6 comments

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Internet advertising as a whole is steadily rising. The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) announced in early October that Internet advertising has reached a new record of $4.9 billion for the first quarter of 2007. Last year first quarter revenues were at $3.8 billion – a 26 percent increase.

I recently read a MarketingSherpa article on one type of online advertising that is making a small comeback. Some call them banner ads some call them online display ads, but according to MarketingSherpa, they are back in vogue. Why? They are lower cost other online advertising methods. MarketingSherpa published a helpful introduction to this advertising medium.

What I didn’t know – the term “banner ad” refers to a specific ad dimension – 468×60 pixels. Ad networks are focusing in on specific niches and are getting higher payouts than they have historically. From an article about niche ad networks: “…while the terms “niche” and “specialized” imply small audiences, many such networks have now billions millions of unique online viewers. As the mammoth networks have grown, they say, so have the vertical contenders.” The networks tend to focus on brands or demographics (such as Martha Stewart’s ad network).

Display ads have risen 2% since 2005. They accounted for 22% of all US Internet advertising revenue in 2006, according to the Interactive Advertising Bureau. Search marketing has replaced some of that. Before search ads, in 1999, display ads made up 56% of the market.

The clickthrough rates on display ads tend to be around 1-3%, and they are good for building brands. The most popular size is leaderboard (728×90) followed by the medium rectangle (300×250) and the wide skyscraper (160×600).

As a marketer, I like to see figures, and MarketingSherpa gave some pricing guidelines. Ads which are priced by Cost-per-thousand impressions – or CPM – has dropped from $8 down to $4 per thousand impressions. For ad clicks it tends to be around $1-$2. I’m sure this varies depending on your brand.

I heard ShoeMoney speak at Blogworld talk about selling ads on his blog. He has four spaces – all display ads – and prices them dynamically. If needed he recommended filling in space with affiliate ads first, and later sell the space to advertisers. He suggested starting even as low as $5 per spot and then pricing them higher as your site gets more popular. He skips the pricing by ads or impressions and just goes for a straight monthly fee. He said gets 5-10 advertising inquiries a day.

  • Matt Kilsdonk

    I can see why CPM ad prices are dropping, small businesses can’t really afford to have branding campaigns like big companies so they need to know that the money they are spending are going towards actual visitors not just eyeballs. I think small business plays a big reason in why AdWords became so popular. I bet if they just did CPM it never would have became so big.

  • Steve Rosenbaum

    I’d like to see some recent data on this. Any data updates for early 2008?

  • nile

    Ya, Its right that online advertising Market Rise, But its more important how much we earn, There are More competition day to day for small companies.

  • Advertising Display and digital photo frame

    thanks for sharing

  • brandon alan scofield

    I prefer ctr of cpc for ads, it is much more profitable than cpm …

    brandon alan scofield’s last blog post..First post

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