Establishing Return on Investment Through

Banner Ad

To establish return on investment through banner ads, first you need to understand the following three factors.

1. Ad impressions

2. Response rate

3. Conversion rate

1. Ad impressions

2. Response rate

The number of times your ad will be displayed online. It is a measure of the number of times an ad is seen. Clicking or not is not taken into account. Each time an ad displays, it is counted as one impression.

The percentage of recipients that view your banner and click through to your website.

3. Conversion rate

The conversion rate is the proportion of visits to a website who take action to go beyond a casual content view or website visit, as a result of subtle or direct requests from marketers, advertisers, and content creators.It is the percentage of website visitors that complete a specified action such as purchasing products, request information, download etc

Return on investment(ROI) is a calculation that tells us whether a particular investment is worth. It tells us whether we’ll make money or not.

ROI = (Gain from Investment – cost of Investment)

For instance; if the cost of your Banner ad is

$4,000, it attracts 400 people and makes 40 sales with each sale netting $200

ROI = (($200 X 40) - $4,000

ROI - $4,000 and total revenue is $200 X 40 sales = $8,000

Gain from investment proceeds as a result of investments (for instance, sale of a product or service)

Cost of Investment is the money spent in the investment.A positive ROI means profits and a negative ROI means a loss.When taking away the advertising costs of $4,000, we have $4,000 left for pure profit. Therefore, the ROI is 100%. This means we profit 100% of the cost we spent.

Establishing return on investment through banner ads,Establishing return on investment through banner ads is a bit complicated. It involves more factors such as number of clicks, cost per click, Opt-in rate, subscribers, Cost per thousand impressions (CPM) etcBut if you have a product to sell, an action to happen or to measure, then there is a way you can establish return on investment through banner ads.

•Cost Of Banner Ads = Number Of Clicks X Cost Per Click•Gain From Investment = Number Of Purchases X Revenue Per Sale•Number Of Purchases = Number Of Subscribers X Conversion Rate•Number Of Subscribers = Number Of Clicks From Advertising X Opt-in Rate•ROI = (Gain From Investment – Cost Of Investment) / Revenue From Investment

•Example

Your banner ad gets you 10,000 visitors and costs $0.50 per click to your landing page which generates around 20% opt-ins. You also have an email sequence that promotes an affiliate product that you will receive $20 per sale, your email sequence is also able to convert at 10%

Cost of your banner ad = 10,000 X $0.50 = $5,000

Number of subscribers = 10,000 X 20% = 2,000

Number of purchases = 2,000 X 10% = 200

Revenue from sales = 200 X $20 = $4,000

ROI = $4,000 - $5,000 (a negative ROI of $1,000)

How to get a positive return on investmentBy increasing the sale priceIncrease the conversion rateIncrease the subscription rateDecrease advertising cost

If you are looking for the best website to promote your products with a banner ad, you can contact the website and they tell you the CPM is $10 and you can have over 1,000,000 impressions for one month. You will immediately calculate the cost of advertising by dividing your total impressions ($1,000,000) with 1,000 (if the cost is on per impression). you will also multiply 1,000 by the CPM $10 to get $10,000 as the cost of advertising.

Suppose you sell each product at $100, you will divide $10,000 by $100 to get how many products you will have to break even on revenues (Minus costs and profits)

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• The best way to get the best return on investment, is first testing the websites before spending on them. you must examine how much sales you will make to break even first. For instance, if you can have 1,000,000 impressions, you will estimate how many impressions you will need to click on the ad and come to your online store by establishing your click through rate (Number of impressions/1,000,000). You will also establish a conversion rate by estimating the number of people who buy your products out of the ones who will visit your website(i.e 5 out of 100 people), this may also be estimated basing on the past data. If the ads on that particular site get that type of click through rate, then this is attainable.

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• You will either start with smaller websites first, or test websites on Google content network.

• You also need to estimate figures based on historical data to see if you are at a better chance of making sales, by asking how many people make a purchase on the same product in that website. Probably search engine people are looking for your product and the banner ad will just get your product in front of someone.

You can establish return on investment through banner Ad after understanding the ad impressions, conversion rate and cost per a number of impressions (CPM). If you aim to maximize your banner ad return on investment, you can visit make free banner for professional banner ads for your website. Spending on advertising is necessary for any business and banner ads work well. But it is important to target the right market for more customers to get good returns on your advertising investment.

Conclusion

Summary

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