Banners are worthwhile only if and when they can bring you money. In order for you to make the most out of this, it is imperative that you understand the pros and cons of every aspect related to the buying and selling of banner ads.
Three ways of selling banners are:
1. cost per 1,000 impressions (CPM),
2. pay per click (PPC),
3. pay per action (PPA).
Buying a PPC banner is usually more expensive than the CPM basis, but can be much more effective because people actually take some kind of action by clicking though to your site. One of the drawbacks to PPC banner advertising is that one person may click on an ad more than once and you get charged for each click. However some ad providers track IP address, and only charge one click per computer per day. Most places though don’t do this for the simple reason that it means less money in their pocket.
The effectiveness of cost per impression banners can vary quite a bit, depending upon their placement on the webpage and you typically (not always) pay the same whether the banner is displayed prominently at the top of the page, or hidden in a bottom corner. Most CPM banner sites rotate the banners throughout the site (Run of Site – ROS) and throughout the page. Banner ads to reach general audiences are typically priced at $1 to $10 CPM, while targeted sites may get CPM rates of $30 - $50 or more. Even though it may not seem like much, banner ads can be quite expensive.
In order for banner ads to be effective, you need to combine above average click-through rates, with below average banner prices and sell either a high-ticket product, a product with a high markup (like an info product) or have a strong back-end in place so you make money on the second, third, fourth and even twentieth sale.
Pay per action banners are usually the most expensive, since you pay only for a desired action. This can be a product sale, having someone sign up for an email list or any other action you want. PPA banners can be very similar to an affiliate program and use the same type of tracking.
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