How to Make Money from Web Site Banner Advertising

By , March 30, 1997

I wrote this article in 1996-1997 for an audience of “web publishers” seeking revenue from their web sites.

Copyright 1996 by Mark J. Welch – last updated March 30, 1997

Everyone wants to make money from the Internet. It seems fair to say that the best way to make money from the Internet is to create a company and sell it, either to another company or to the public. Another way to make money is to design web sites for large, cash-rich companies seeking a presence on the Internet. But the consensus seems to be that in the long term, much of the activity on the Internet will be paid for by advertising.

Of course, a lot of the Internet is advertising: web sites for Toyota and Snapple are little more than paid advertising, although those sites can be very informative if you are interested in these products. There are other ways to advertise on the internet: for example, by “sponsoring” a mailing list or newsletter, or by broadcasting unsolicited junk email. But in this article, I will focus on the narrow range of “advertising” that involves paying for “banner advertisements” on web sites.

A “banner advertisement” generally appears at or near the top of a web page, and usually is intended to “tease” the web surfer into clicking on the banner to travel to the sponsor’s web site. Even if the viewer does not click on the banner, the image on the banner is registered in the viewer’s mind, just like a TV or magazine advertisement.

How Banner Ads Are Displayed: The simplest way to display a banner is to simply include code on the web page that loads an image file from a specific location on the internet. The ad never changes until you manually edit the file to change the code to load a different banner graphic.

But another strategy is not to load a fixed image, but to send a query to another web site asking which ad to display next. The advertiser’s web site might send back a different ad each time, or if the query is sent to an advertising agency or broker, a different advertiser’s banner might be displayed each time the page is viewed.

How Are Ad Displays Tracked? Each time the banner graphic is loaded, the web site where it was stored logs the request, including information about the web site or web page that was loaded when the graphic was requested. Usually, this is accomplished by including an ID code or number as part of the code that loads the web graphic.

Targetting Ad Displays: When a request is submitted to the “ad server” to load a graphic banner, the “ad server” also receives certain information, including the internet address of the person requesting the software and, in some cases, the type of web browser software used. The “ad server” can use this information to select different advertisements. Different ads may be sent based on the “domain” used (commercial or educational or specific countries) or based on geographical regions that are “guestimated” based on the location of the user’s service provider (for example, a request from a user of Walnut Creek-based Value.Net might be assumed to come from Alameda or Contra Costa County in California).

The “ad server” may be stored on the same computer as the web site where the ad is displayed, but often the “ad server” is a special computer dedicated to serving advertising requests for many different web sites.

What’s Involved in Selling Ad Space at your Web Site? There are two distinct functions to be aware of in selling web space advertising: selling ads and displaying them. Most web site designers are good at creating and maintaining their web sites, but not at writing code to rotate and display ad banners, nor at selling advertising space.

Although some very large web sites, like Yahoo, sell their own advertising space to sponsors, most web sites are too small to have a full-time ad salesperson. These smaller sites rely on other strategies to sell advertising.

Ad Registries: One option is to list the availability of ad space at your site with one or more “advertising registry” databases available on the web. In theory, these databases are checked by potential advertisers — but so far there is little evidence that advertisers use these registries. 

Brokers: Another strategy is to have an “advertising representative” or “broker” represent the web site. Some companies in this category will actually send out sales people to meet with potential advertisers; others will simply mail out media kits and create their own web site, and wait passively for advertisers to come to them. 

Pooled Web Site Ad Programs: Several companies sell large blocks of advertising and then display ads on a large number of small web sites.

For example, the Commonwealth Network at one time boasted that it had signed up over 8,000 small web sites to carry its advertising banners, amounting to nearly 70 million ad displays per month. The company screens each web site and each web page for “acceptable content” and then re-sold blocks of advertising to sponsors like NBC, Toyota, Microsoft, Apple, and Snapple. The Commonwealth Network also displayed ads for its own Riddler web site. However, in early 1997, the Commonwealth Network began to provide false information to web sites, and lied to affiliates and then refused to pay them promised royalties. By late March 1997, most of the Commonwealth Network’s affiliates had left the network.

Other companies, like the Internet Banner Network and Webvertizing, promised to pay only when paid advertisements are displayed; later, these two companies also defaulted on payment promises.

Few companies have not proven their ability to sell paid advertising nor to pay web sites for ads displayed. Each company has different standards and requirements (including web site content or quality, traffic volume, and ad pricing). 

Banner Exchanges: Some web site owners aren’t as interested in making money as in bringing more people to their web sites. For example, if you already have paid sponsors for your site, or if your site is selling products, you may want to generate more visitors to your site to increase your revenues. One way to do this is to buy ads on other web site, but an alternative is to trade ad space at your site for ad displays elsewhere. Already, two dozen companies provide a mechanism to display other ads at your site, count each display, and then display your ad at other sites based on the number of ads displayed at your site. None of these companies offers a “one-for-one” exchange: you generally get 1 display of your ad for every 2 ads displayed at your site, although some companies offer more generous exchange ratios. The “extra” ad displays generated through these programs are used to display paid advertisements. 

As of March 1997, at least one “banner exchange” company was offering some level of “targetting” for web sites: SmartClicks provides the ability for a web publisher to use accrued ad displays in specific categories. SmartClicks’ software goes further by actually tracking the performance of each advertisement and automatically shifting ad displays into categories that generate higher click-through rates. Other advertising networks claim to be developing similar capabilities. One benefit of “targetted” or “intelligent” advertising rotation is that an ad network could continue to improve its performance (measured in click-throughs or ad revenues) by optimizing ad displays, even without increasing the network’s size. I expect that most ad networks will provide some targetting capabilities by year-end (and networks that do not will gradually fade away).

Running Your Own Ad Server? More than a dozen companies will give, sell, or license software for you to use at your web site to manage and rotate ad displays. While most web sites won’t want the hassle or expense of managing their own ad servers, some web sites might find this strategy more effective and perhaps more reliable than using third-party ad servers. 

How to Compare:

If you operate a web site, you will need some statistics about your site to understand what revenue your site is likely to generate if you sign up with a particular plan. For example, some ad networks won’t pay for multiple adviews by the same user; other ad networks won’t pay (or pay less) if few users click on ads at your site. I recommend that you sign up with several companies, and use different companies’ banners on different pages that are likely to be loaded by a single user in a single session.

Some ad networks provide a single code or ID for your entire web site, while others require that you register and use a separate code for each web page at your site. While the latter is less convenient, it should improve “targetting” of ads for sites with a variety of web content, and may also help the ad network identify abuses and cheating by affiliates.

Track Record: An important factor to consider is the history of a company. A number of “companies” have announced broad plans, then failed to implement their ad networks; others have promised high rates, then defaulted. One ad network (the Commonwealth Network) even paid substantial royalties for several months, then began furnishing false information to web sites; when web sites questioned the sales figures, CN reassured them that the figures were accurate — but then changed its mind and refused to pay according to those figures, claiming that sales were poor (and ultimately paying only 225 out of 8,000 sites for January traffic).

Selling Ads Direct: The best advertiser-website synergy will always be one-on-one, as advertisers seek to place an ad on pages that are directly related to the subject being promoted. For example, I sold sponsorship of my “Web Site Banner Advertising” and “Caller ID” pages to companies with related products and services. Be sure to register your site and/or individual pages with web site advertising registries and trade reciprocal links with related-subject web sites. In some cases, your site may be ideally suited for advertising by certain vendors who promise payment based on “click-throughs” or even based on actual orders placed by visitors originating at your site. Unfortunately, many vendors have made generous payment promises, and then failed to honor their promises or failed to implement an adequate tracking system. I recommend trying the web ad “brokers” only if you don’t have to sign an exclusive agreement.

Banner Characteristics: In general, a smaller banner is better because (a) it “intrudes” less on the content of the page, and (b) it loads faster. “Animated” banners (usually using GIF animation) can be very irritating and intrusive. Webmasters should use of the HEIGHT= and WIDTH= codes in the IMG tag, so that the text of the page is displayed by Netscape Navigator while the image is still loading; this is important because all banner systems “crash” occasionally and are unresponsive for hours at a time.

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