## Online Banner Display Advertising & ROI Calculations

### 17 Responses to “Online Banner Display Advertising & ROI Calculations”

1. dave says:

2. anon says:

Fix the following it should be Total cost = (impression/1000) X \$CPM

NOT / (divide)

1. Take the CPM and calculate the Total cost = (Impressions / 1,000) / \$CPM

3. anon says:

besides that thanks, super helpful. youre awesome

• Mark Kennedy says:

Thanks for the kind words and the correction. I just fixed it

4. Great article thank you, but it mentions click throughs upwards of .25%. How high of a CTR do most people normally see? I just ran a banner campaign with 2,500,000 impressions and saw only about .05% CTR on the normal static ads. We saw rich media CTRs up to about a .1%.

• Mark Kennedy says:

Hi Jason,

I just used that number as an example for the math. But your actual results are more typical. Unless the call to action or the ad itself is pretty strong, banner ads tend to have low CTR’s. Not all, but most. And of course the site the ad is on is a huge factor as well, but overall you won’t see high CTR’s on general banner advertising. However, remarketing ads may see slightly higher CTR’s

5. Excellent info. Thank you. I am curious about the web banner naysayers. Where do you get your information?

6. […] targeting, banner display is essentially a billboard along the highway. Sure a lot of people see it, but most don’t care, […]

7. Bill says:

Having been in advertising my entire career, I’m always amused at the direct marketing folks who are so proud of their analytics. At a conference I once pointed out that because they can calculate to the dime their budgets averaged around a million and a half dollars. As a traditional media guy, mine averaged around 35 million. Sometimes you don’t want to be too detailed. As William Wrigley is quoted as saying, “I know I waste half my ad budget, I just don’t know which half.” So he kept spending the entire amount.

• Mark Kennedy says:

Hi Bill. Good point. We like to take a look at the pure ROI on the numbers, but you can always consider the branding/awareness aspect of a campaign as well. It shouldn’t be totally discounted.

8. Lorenzo says:

Dear Janine,

Great article! Maybe you can give me an hint to understand how to deal with a question that I found very complicated to answer to: my Boss is asking me to bring extra bookings to our travel&leisure website in a mohth but he wants to know/compare how much we’ll have to pay for a CPA if we’ll look at these bookings with an extra budget and compare the CPA with the fee we pay to a Travel Agency. Now I’m trying to solve it but having dangerous numbers… CPA of additional booking of \$ 900 versus an agency fee of \$ 80. I think that something is wrong in the question…but i cannot solve it… Help! Thanks!

• Mark Kennedy says:

Hi Lorenzo! We’d be glad to help, we would just need more details/numbers. Feel free to give us a ring here at the office and we can help.

9. Mark says:

Hi Janine,

Thanks for this informative article.
Can you please clarify some of the basic math you used?

Most importantly, the “1 in 20” or “1 in 100” example. How did you simply arrive at the 20 or the 100?

I’m looking at using this for regular PPC and not just for Display and your article is extremely helpful! This kind of analysis would help me figure out what I can answer a prospect in an industry I don’t know about when he says “I can spend \$5,000 per month, what can I get from it?”

Thank you

• Mark Kennedy says:

Hi Mark,

The 1 in 20 and 1 in 100, were just examples to illustrate a possible conversion rate. What you need to know is the conversion rate of a visitor for the site. But be aware they can vary by channel. For example, the conversion rate on a banner ad visitor could be 1%, but maybe 2% on a remarketing banner ad, or % on an an email blast and 4% on a PPC keyword ad, and so forth. So knowing the conversion rate by channel (or closely estimating) will help. But if you don’t know that rate just yet, test small.

If you need more help or clarification, shoot me an email mark at seominteractive.com

10. Rajesh says:

We are planning to launch a B2B website. I wanted to know how do you arrive at CPM for a portal/website to be able to decide the rates for advertising on our website.

• Mark Kennedy says:

Hi Rajesh,

It’s always tricky with a new site as you don’t have any data. So you want to make the price attractive, but not sell short.

First, you may want to build some traffic before you start selling ads, this way people aren’t disappointed with results. But if you want to move sooner than later I would start with a smaller CPM to test the waters. Maybe \$5-\$10. Unless you think you are going to have strong traffic from the get-go. Then you can get more aggressive. Hope that helps!

Mark