The Bad Business of Banner Ads

I have a love and hate relationship with digital marketing statistics.

My heart went pitter-pat in 2002 when I used the findings of a AOL study on the amount of time spent online by Milwaukee mothers to launch the now defunct, which I ultimately sold to the Milwaukee Journal Sentinel in 2006.

Banner UglyBut my heart turns black every time I read a post like Jack Warren’s The Banner Ad Lives (Don’t Believe the Hype)!,” on The Wall Street Journal’s CMOToday blog. Despite easy access to key reports and performance metrics, Warren concludes that “it’s too early to call the coroner” on the long reviled banner ad, because in 2013 marketers spent more on banners than the previous year.

Banner ads may have accounted for 32% of U.S. Internet ad spending in 2013, according to the Internet Advertising Bureau, but that’s only because they’re flexible and cheap to deploy in branding campaigns across multiple ad platforms. That’s good news for publishers dependent on deep pocketed large brands, but bad news for small business owners with limited budgets, who don’t have the luxury of running multi-million dollar branding campaigns to merely achieve top-of-mind recognition with potential customers. The average SMB owner wants real results in the form of high click-thru-rates and, more importantly, consistent sales conversions for each and every banner they run.

Good luck with that.

In its analysis on digital display ad benchmarks for 2013, Sizmek reported that CTRs for standard banners declined to a dismal at 0.08%. Rich media banners yielded a marginally higher 0.25%, and in-stream video ads, pegged as the promising new kid on the block only a couple of years back, posted an abysmal CTR of 0.6% for the North American region, the lowest in the world among all regions studied.

The Ugly Truth … That’s Always Been

The bottom line for SMB owners is that banner ads remain the worst possible form of digital advertising. That’s because “banner blindness” is alive and well among consumers, as is the increasing use of ad blocking software. PageFair, for example, found that fully 30% of web surfers were blocking ads in 2013, and the use adblocking software is increasing at a rate of 43% per year! Ignoring those realities, as well as the sobering fact that 8% of Internet users account for 85% of ad click-thrus, is little more than a recipe for throwing money in the street.

Even more, banner blindness is well-studied and analyzed thanks to Jakob Nielsen’s pioneering work in web usability and heatmapping studies of web page interactions and banner engagement. For Nielsen and his colleagues at the Nielson Norman Group, the verdict has been in on banners for a while now.

“At all levels of user engagement, the finding is the same regarding banners: almost no fixations within advertisements. If users are looking for a quick fact, they want to get done and aren’t diverted by banners; and if users are engrossed in a story, they’re not going to look away from the content.”

So much to the chagrin of Jack Warren, and after 20 years as a web marketer, I will continue to believe the negative hype on banner ads until someone can statistically demonstrate that they’re actually a smart advertising investment.

Related: Banner Blindness InfographicBanner Ad Metrics

Pat McKenna is a digital strategist, social media manager/instructor, web designer and founder of MojoWeb Productions, LLC. in Milwaukee, WI. He can be reached via e-mail or by calling (414) 732-3397. Keep up to date on Pat's latest scribblings by subscribing to StrategicMojo, the monthly e-newsletter no SMB can be without!