The Art of the Click-Through

Home Office Computing, June, 1999 by Zenya Gene Senyak

Banner ads are easy to design and cheap to place, but it takes business savvy to make them generate sales

LAST YEAR, POWERHOUSE COMPANIES LIKE MICROSOFT and IBM spent more than $2 billion on Internet advertising, according to a Pricewaterhouse-Coopers report. But banner ads aren't limited to the big guys--affordable and even free Web-based services and tools let home-based businesses test the waters with a minimum of risk.

Banner advertising can help build brand awareness to support your company's marketing and sales efforts, as well as sell merchandise and services directly from your Web site. Although crafting a banner ad and buying space may seem like a simple prospect, don't underestimate what you're getting into. Web advertising models--both paid and free--are complex and replete with unfamiliar terminology. Developing a strategy most likely to yield a healthy return on investment will take careful consideration, and perhaps some trial and error along the way.

Pay Per Face Each time an ad banner pops up on a Web site, it registers one impression. Impressions are sold in bulk by the thousands (from $20 to $50 per 1,000), most commonly on big "tier one" sites such as Netscape, Yahoo, or the shareware center Tucows.

Placing your banner on such high-profile sites is an effective way to establish a Web presence, help develop a brand, and--if your product suits a demographically broad audience--sell it. However, because traffic on these sites is so heavy and the audience so broad, you can reasonably expect only 1 percent or 2 percent of the viewers to click through the ad to visit your site.

Although another ad model might bring in more customers, if your heart's set on seeing your banner ad on Yahoo, consider buying from a discount ad network or auction. With LinkExchange (www.linkexchange.com), you pay $10 per 1,000 impressions, with specific sections such as Yahoo Weather and Excite Automotive offered for about $15 per 1,000--only about half the usual rate. Or try Adauction (www.adauction.com), which auctions off unsold advertising space on top sites in increments of 100,000 impressions.

Pay Per Click A second option is to buy click-throughs. In this model, each time a visitor to a site hosting your banner clicks through to your site, you pay a specified amount. Although this is potentially more cost-effective than buying impressions, you should be careful; paying by the visitor means quality matters. If those click-throughs don't result in a percentage of sales, you could lose money.

To ensure that only the most qualified buyers click through, select reputable host sites related to your field. A good source for affordable click-through space can be found at ValueClick (www.valueclick. com/ad.html), which collects unsold space from Web sites. The site receives a fee for each click and charges you only when a visitor clicks to your site. Be sure to select a portion of the ValueClick network that relates to your business, and expect to pay from anywhere from 5 cents to 35 cents per click.

Share the Wealth If neither impressions nor click-throughs seems like a good fit, maybe revenue-sharing is for you. With an affiliate program, you recruit site operators to host your banner in return for a commission on every click-through.

There's no up-front cost to get started; simply contact associates and suppliers in your field and offer to swap banners, or request short-term squatting rights on their site. Offer 25 cents per click-through, a larger amount per sale, or a combination of both.

If you don't have time to find your own affiliates, you can pay a broker service like ClickTrade (www.clicktrade.com) to do the legwork for you. You deposit $100, then pay 25 cents per click to the affiliate and a 30 percent commission to ClickTrade. If your business is more leads-focused, you can deposit $400, then pay $5 per lead or $20 per sale, plus a 30 percent commission.

Andrew Conru, CEO of Friend Finders, a Palo Alto, Calif.-based online personals service, attributes much of his company's growth over the past two years to its affiliate program, which boasts 10,000 member sites and counting. He pays site operators 25 cents each time a click-through visitor registers for the service, which means he spends "pretty much zero" on advertising.

Barter for Business If you have trouble finding fault with anything free, you'll want to consider free advertising options such as a banner exchange program. The dominant player here is LinkExchange, which has more than 1 million small-business members. LinkExchange gives you one impression somewhere on its network of Web sites in exchange for every two impressions another advertiser gets on yours.

Although you can specify the length of your ad campaign, you have no control over where your banner will fly. Realistically, this is a good choice only if you're selling something nearly anyone would want and don't mind opening your site to a parade of foreign banners.

Add a Search Engine Phrase To give your campaign a one-two punch, consider backing up your banner with a search engine phrase. Although Yahoo and AOL wouldn't quote us their phrase rates, you can expect to pay in the neighborhood of $50 per 1,000 impressions.