1. Definition:

Banner advertisements are one of the most recognized features on the Internet. Banners are usually rectangular ads that are placed at the top or bottom of web pages. Typically, they will offer a brief advertising message and a request to "click here". By clicking on the ad, the user is taken to the advertiser's site.

2. Implementation:

There are two basic ways that you can utilize banner advertisements. First, you can advertise your own web site/product/service using banners. Second, you can generate extra profits by sponsoring banners on your own web site.

To advertise using banners, you will first need to create a banner design. If you want to design your own banner, there are many tools available on the web to help you. For instance, Smartage.com has an easy and relatively cheap service that will help you design your own banner quickly. Your other option is to hire a professional designer to create an eye-catching banner for you.

After you have a banner design, you will need to find a way of placing it on other people's web sites. There are two ways of having your banner placed on hosting sites: you can pay to have your banner placed, or you can take part in a banner exchange program.

The first way that you can have your banner displayed is to pay for web sites to host it. You will be charged based upon how many times the banner is seen (called a cost-per-impression rate or a CPM rate) or how many times your banner is actually "clicked" by users (called a cost-per-click rate or a CPC rate.) The price varies widely, but on average, expect to pay about 15-30 dollars for every thousand impressions or 3-5 dollars for every click- through.

You can buy this type of advertising either through a network such as DoubleClick or 24/7 Media's ContentZone. TheAdstop has an excellent list of banner networks, as well as how-to advice on banner advertising.

If you do not want to deal with a large service, or if you want to deal with only narrowly targeted topics, you can also buy banner space directly from individual web sites. Many sites will have a contact person who is in charge of selling banner space.

Before buying from either a service or individual site, make sure that it targets the specific audience you are looking for. Also make sure that there is a stable way of monitoring traffic on the sites so that you will know exactly how many people are actually seeing your banner.

An alternative to paying a site for displaying your banner is to take part in a banner exchange program. In a banner exchange, you agree to place other people's ads on your site in exchange for them displaying your banner. As an example of this type of service, LinkExchange.com was one of the first free ad exchange networks -- it can now be found at bcentral. One of LinkExchange's services is a well-defined banner swap that will specifically target the types of sites that you want to link to, from a list of more than 2000 categories.

Another place to find banner exchange programs is Adbility. Adbility has a large list of ad and link exchanges, many based around specific targets, such as "Case's Baseball Card Links."

When dealing with a banner exchange, it is vital that you check out what kind of company you are working with, and what standards they have for their participants -- otherwise you may have banners appear on your site advertising adult sites or other content you may not want associated with your business.

When choosing a banner exchange program, you should also be aware that many banner swaps are not on a 1-for-1 basis -- In many cases you will have to display a number of banners for each time you want your own banner displayed. This is not a problem if you already have a high-traffic site, but if you are looking to increase traffic to your site, being a part of this type of program might not be profitable to you.

If you are not interested in using banners as an advertising tool, but would like to display banners on your web site as a profit-source, the best way to proceed is to join one of the networks mentioned above. You can also create a message on your web site saying that you are willing to display banners -- if you do this, make sure you know how many people visit your site and how much you want to charge for hosting banners. If you are unsure about how to track visitors or clicks, charging a flat monthly rate is the best way to go.

3. Facts and Statistics:

A recent study by Forrester Research predicts that online advertising will increase nearly six fold in the next 4 years, rising from 1.3% of all advertising spending to a substantial 8% of total spending, totaling some $22 billion per year. A large amount of this advertising will be banner-based. According to Jupiter Media Metrix, 80% of advertisers use banners, and 18 of every 25 online ads created by advertisers are banners.

Unfortunately, banner advertisements have not been as effective as they were in the past. The first banner advertisement in 1994 garnered an amazing click-through rate of 50%. Now, click-through rates range from .5% for untargeted banners to 1-2% for targeted banners.

Banners are still highly visible, however. In a nationwide survey of nearly 1500 experienced Internet users, Anderson Consulting found that banners were the most mentioned medium for driving buyers to online stores, with 25% mentioning banners (compared to 14% for newspapers and magazines, 11% for television, and 4% for newspapers).

4. Evaluation:

Banner ads have several advantages. First, they are relatively easy to produce and place. They can also be placed on specific sites, which means that you have a good level of control targeting specific audiences.

Banners also are good for "branding" -- Even if users don't click on your banner, a large audience will still see it, creating name and brand recognition. This repetition of your message may increase sales in the long run.

There are also several problems with banner ads. With the large number of banner ads on the Internet, they are becoming more and more ignored by experienced Internet users. This accounts for the diminishing "click-through" rates banners have been experiencing.

Banners also have a short shelf life -- studies have shown that most banners lose their effectiveness after about 30 days. This means that this is a marketing method that you will have to change more often than some others, to make sure that it stays fresh for the audience.

A final issue with banners is that they are intended to carry a VERY brief message -- a banner will hold the attention of a customer for about 3-5 seconds. If your message is too complicated or involved to convince a user to click in that short of a time period, a banner is probably not going to be an effective tool for you.

5. Conclusions:

Banner ads can be a very useful tool in a marketing campaign. They are a wonderful way of getting the word out about your web business. You can have your advertisements seen by very specific audiences, allowing to reach the people you want to reach with your message.

Banners, however, are not a cure-all for lagging sales. Banners, like almost everything else, will work best when a part of a whole marketing system. There are certain things that banners just cannot do: they cannot create complex, involved arguments to make your customers come to your page, and they cannot make a sale -- all they can do is get your customers to your web site. Once there, you will have to use other tools to complete the job.