The most obvious, and most typical revenue generating tool used on websites throughout the internet is the ubiquitous banner ad. Having been a part of the commercial Internet virtually from the beginning, the banner ad has since morphed into a variety of formats and sizes.

Pros and Cons of Banner Advertising

(Excerpted from Joomla Cash!) Banner advertisements are easily implemented, whether by using Joomla's built-in Banners Component, or by directly including in your template the code directly from a banner ad program, or by using banner-ad solution, such as the popular open-source package OpenAds. (Available from www.openads.org.)

Provided you blend your banner advertisements unobtrusively into your content, and take care not to bombard your users with a deluge of commercialization, banner ads can provide a modest, but worthwhile income to even the smallest of websites. The key is to balance the advertising needs without compromising your content, which is the reason your visitors are coming to begin with!

Depending on banner ads for revenue, however, leaves the publisher vulnerable to natural ebbs and flows of website traffic. Also, depending on what type of banner you decide to run on your site, your visitors may be required to click on the ad before any money is earned. Bear in mind that typical click-through rates on traditional banner advertisements run between 0.5% and 1%, and you can quickly see where moderately busy traffic levels would need to be maintained to draw a steady, reliable, and sizable income. (End Excerpt)

In the next section, we'll look at how to evaluate and select potential ad formats to run on your site.

Selecting a Format

There are a wide range of "standard" advertising formats that you can choose from to best suit your design. Banner ad formats range from the more traditional leaderboard and skyscraper banners, to large rectangles embedded in your content, to small, button-sized graphics.

Traditional Banner Ad Categories include:

• 468x60 or 728x90 Leaderboards
• 120x600 or 160x600 Skyscrapers
• 250x250 or 325x325 Rectangles
• 120x120 or 125x125 Small Rectangles
• 120x60 or 125x90 Buttons

The sizes you select depend to a large degree on how you wish to organize and layout your content. Be careful not to overwhelm your content with advertising, but rather, you should seek to blend advertising with content in a seamless and complimentary manner.

Here's a look at some common ad formats:

 In the next section, we'll look at factors to consider when evaluating potential advertising networks.

Selecting a Program

(From the book)

Signing up with an affiliate program is an easy way to obtain a sizeable ad inventory to “sell” on your website. You simply sign up, select your preferred ad formats and advertisers, and implement a small chunk of code on your website. However, there are some stipulations here.

Firstly, oftentimes, your site's content must meet the editorial guidelines of the ad program, which can be a sticky subject if your site's content runs towards the risqué.

Secondly, you can often lose control over the advertisers and the quality of the ads you are running. Many ad brokers will deal with any advertiser willing to shell out the required funds, and many of those advertisers are our dear friends who have so generously offered us “free stuff” for so many years, from desktop annoyances to “free” portable music players, cellular phones, and department store gift cards.
Finally, you are at the mercy of your ad program for your monthly payment, which is generally not a problem with a reputable broker, but sometimes “it happens” and your check gets lost in transit. This can be mitigated by selecting a program that pays out commissions via E-Bay's PayPal or another reputable payment processing service. Also, your site must typically meet certain “minimum” amounts in order for the ad broker to even cut your check and mail it.

When selecting your ads, you need to be aware if your ad network or provider lumps similar-sized formats into what is served for that category. As an example, if you select a leaderboard-format ad, as we'll see in the next section, typically your ad program will include both 468-pixel-wide ads and 728-pixel-wide ads in the inventory for that format. So you need to be prepared, with some "stretch space" in your HTML template, for the larger format.

Most ad networks provide some mechanism for manually selecting the narrower or wider leaderboard format, however, this can reduce your available inventory, as some advertisers only offer ads in one size format or the other in each traditional category.

A listing of popular banner-ad networks, that you can sign up for, can be found here.

In the next section, we'll look at the classic Leaderboard format banner ad. 

468x60 and 728x90 “Leaderboard”

The venerable grandfather of all banner advertisements, the Leaderboard ad is generally considered the benchmark against which other ad formats are considered. The earliest banner ad was run as early as 1993, and was sold to either a law firm or to telecom firm AT&T, depending on your source.

Leaderboards are the single most ubiquitous type of display advertising, but have suffered over the years from ever-declining click-through rates as many users have become accustomed to ignoring the "top-center" placement most traditionally used with this format. Blending this format directly in between your navigation menu and your content can help put this format directly under your visitors' eyes, but also makes proper layout planning difficult. 

Leaderboards typically boast a clickthrough rate of between 0.5% and 1.0%. Be aware of this if you select a Pay-per-Click ad program.

Benefits:

• Minimally invasive to website visitors
  
• Capable of presenting a moderate amount of information
  
• Adaptable to a wide variety of layout and presentational schemes

Liabilities:

• Easy for users to ignore
  
• Low click-through rates

120x600 and 160x600 “Skyscraper”

Description:

The “Skyscraper” ad is sized to fit on a left or right-hand margin of the screen, and orients vertically with the content. The skyscraper is traditionally the second-most common ad format, boasting a click-through rate roughly equivalent to Leaderboards, due to the vertical orientation allowing a wider array of potential eye-catching designs. 

Benefits:

• Minimally invasive to website visitors
•  Capable of presenting a moderate amount of information
•  Adaptable to a wide variety of layout and presentational schemes

Liabilities:

• More invasive to website content and options than the leaderboard
• Easily ignored Typically, offers lower click-through than leaderboard

Rectangles (in-content ads)

Description:

A fairly recent addition, the in-content rectangle offers a higher visibility and superior click-through rates, at the expense of content visibility.

Benefits:

• More visible than either the leaderboard or the skyscraper
• Capable of conveying more information than other formats
• Often interactive, sometimes expandable on a user's mouseover
• Higher click-through rates

Liabilities:

• Very invasive to user experience
• Very invasive to website's layouts, particularly when embedded in content

In the next section, we'll look at Ad Buttons.

Ad Buttons (120x60 and 160x90) 

Description:

Ad Buttons represent a compromise between the liabilities of larger ad formats. Ad Buttons provide a great way to link to advertisers or other promotional content, but offer little in the way of inducement due to their diminutive size. However, what they lack in persuasiveness they make up for in unobtrusiveness: Their small size minimizes user irritation.

Benefits:

• Easily integrated into template and content items alike
• Compact size is minimally invasive to the user experience
• Can be inserted into your template without breaking most typical layouts 

Liabilities: 

• Provides minimal space to communicate the buying desire to visitors
• Generally lower click-through rates 

In short, Ad Buttons make an excellent compliment to other ad formats, but should generally not be exclusively used. Additionally, ad buttons work best when blended into your website's design as carefully as possible.

In the next section, we'll look at Pop-Under advertisements.

Pop-Ups and Pop-Unders

Description:

While the “pop-up” or “pop-under” ad was originally devised and implemented by disreputable marketers, and is widely considered the most annoying ad format, it should not be entirely ignored, as it offers a unique set of benefits and liabilities.

Pop Ups/Unders by far are the most lucrative image-based advertisement option, but should only be considered in situations where the website's content is compelling, and where the site's content is demonstrably expensive to provide, either because of sheer size, or because of overwhelming popularity.

As an example, webmasters with multimedia portals will want to take a long, hard look at the pop-under, since providing bandwidth for such intensive uses as video and multimedia download is very expensive. It is imperative that the pop-under be both conservative in content, and limited in the frequency of its popping up or under. Once you've annoyed visitors, you most likely won't get them back. Be warned.

Benefits:

Liabilities:

In the next section, we'll examine another lucrative, but controversial format, Interstitial Banners.

Interstitials

Description: Another advertising option that is highly lucrative, but annoying to end users, the Interstitial enforces a “commercial break” on visitors by directly imposing a page of advertising between the home page and deeper content that your audience is trying to access. Benefits: High click-throughs, maximized visibility Enforced viewing of ads Liabilities: Enforced viewing of ads Highly disruptive and invasive Easily blocked by third-party programs or by disabling Javascript

While some site visitors will automatically be put off by the inclusion of advertisements on a website, (we'll lovingly call them dot-commies,) the vast majority of your audience will understand, or even support, your decision to ensure your site's future by securing revenue streams now.

We now have an idea of what types of ads will fit our presentation, but before we can make a final decision as to what to implement and how, we need to take a look at the various schemes for compensation used by banner ad providers. We'll look at this in the next section.

Banner Advertising Compensation Schemes:

There are three major compensation schemes for banner ads, each offering a unique way of both conceptualizing the visitor, and paying the website publisher. Each has it's benefits and drawbacks, and each has its own place in your overall marketing mix. An important consideration is that the advertising provider will keep a certain percentage of your earnings for themselves, so plan accordingly when considering the various options:

CPM (Cost-per-Thousand Impressions)

Just as the “Leaderboard” banner is the grandfather of all online advertising, so too is the CPM model the grandfather of measuring the expense of, or compensation from an ad campaign. This model pays a fixed rate per thousand ad impressions. As such, this format encourages webmasters to increase not only their overall number of visitors, but also the number of page views each visitor generates, in order to maximize the number of ads presented.

Sites with dense, interlinked content, or content that consumes multiple “pages” per article benefit most from the CPM scheme, sites that are based most around forums, message boards, or other “one page” presentations of information will benefit the least.

Sites built mainly as blogs are particularly unsuitable to a CPM compensation plan. Since most of a blog's visitors will visit the main page only, the very way the information is presented mitigates against increasing pageviews. The rates for CPM ads vary widely according to the particular ad format being used. For mass-market leaderboards and skyscrapers, it typically runs from $0.25USD to $2.00USD per thousand impressions. Interstitials and rectangles typically occupy the middle of the CPM pricing ground, and pop-ups generally pay out the most, as high as $10USD per thousand impressions, but typically in the $3-$5USD range.

CPC (Cost-per-Click)

CPC is another old-school ad metric. It considers the customer, your visitor, to only be of value once they have chosen to click through to the site being promoted. As such, this means that much of the time, you might be providing “free advertising” to the businesses whose ads you present.

Generally speaking, anywhere from 0.1% to 1% of your visitors will click on ads on any given day. We'll assume the median of .5%. Since CPC ads pay based on the customer's decision to click, and since these ads are often deployed in a mass-market manner, without being carefully matched to relevant content, the pay rates on individual clicks can vary widely.

Generally, for quality image-based ads, they're in the $0.50USD, to $1.50USD range per click. The lower quality ads, which typically offer “Free iPods” or some other impossibility, often pay out at very low rates, as low as 5 cents per click. For text-based ads, the CPC rate can be quite low, as low as $0.05USD, or quite high, depending on the quality of the traffic your website is sending, or depending on how well-targeted the ads are to your website's visitors. That said, CPC ads that are more carefully tailored to a website's specific demographic and market can often fetch premium rates, particularly when dealing with smaller, niche-oriented ad brokers, or directly brokering with the business to be promoted.

CPA (Cost-per-Action)

Cost-per-action ads are often the toughest ones to make the best use of. These ads require your visitors to not only click through, but then to take a particular action, which often involves buying a product, but will sometimes involve taking a survey or signing up for a mailing list. CPA ads are most typically used by large, aggregated Affiliate Programs, such as Commission Junction, LinkShare, and ShareASale, all of which partner website publishers directly with product manufacturers and marketers eager to place and sell their products on your site.

Since these user actions directly generate revenue for the advertiser, they directly generate revenue for you as well. Typically, a website administrator makes a straight percentage of the cash value of the product being sold, or a fixed rate, depending on the advertiser and program. The problem is, our visitors can be very fickle about making sure they reward their favorite websites by deliberately shopping through our website's recommended vendors. Generally speaking, less than one person in every 10,000 visitors, or even fewer, will decide to buy a seemingly unrelated product just because it is featured on our website.

Another problem with CPA ads is proper tracking of sales. Generally, a cookie is placed on your visitor's computer which tracks where the sale generated. The problem arises when you consider that very few people visit content-driven websites with an intent to buy immediately. While they may consider your site's recommendation, they will most typically take their time making the buying decision, and CPA marketers capitalize on this by making “your” cookie owning that customer's sale valid for only a specific period of time, which may expire in as little as a day, or as much as a month or more. And, of course, since your visitors are clicking away from your site and into somebody else's, you have no way of comparing metrics to determine whether you are being effectively “squeezed” for free advertising by these programs.

Overall, sites with massive audiences can make fairly effective use of CPA ads, as can sites that choose to carefully feature and highlight only the most pertinent products, and provide direct inducement to buy that product “on the spot”. Everybody else really need not apply.