Today’s Wall Street Journal had the following comment by Colleen DeCourcy, chief digital officer at Omnicom’s TBWA:

“Banner ads will be the new junk mail.  More and more, reputable companies won’t be buying up the space around the Web sites you visit.  Clicking these ads will become less and less legitimate as brands will endeavor to do things that add more value to you in the social-media and customer-service space.”

SodaHead.com seems to be the exception to the conventional wisdom that click through rates for banner ads are low.  SodaHead is an online community and according to a Wall Street Journal article a few weeks ago, “SodaHead ads enjoy click and conversion rates of as much as 10 times the industry average.”  As I wrote in an earlier post, click through rates for banner ads are typically much less than 1%.  The click through rate refers to the number of times a banner ad was clicked.  For example, if a banner ad was displayed 100 times and it was clicked on once, the click through rate would be 1%.

There are several ways that you can try to increase the likely click through rate.  You can optimize placement by displaying your banner ad on a website with synergy.  Alternatively, you can use rich media to make the ad more noticeable and engaging.  Personalization is also likely to increase clicks.  So how does SodaHead do it?  They ask provocative questions and engage viewers by asking for their opinions.

Though SodaHead has a high click through rate, what is their return on investment (ROI)?  My question remains.  What is the value of a banner ad?  As the Wall Street Journal article points out, SodaHead has yet to make money.

If there is a silver lining to this recession for marketers, it may be the focus on analysis and measurable results.  With every marketing dollar being scrutinized and questions being asked about return on marketing investment, every  tactic is being reevaluated.  For a long time, I have questioned the value of web banners.  They are easy to ignore and, as a result, have lower response rates than other marketing vehicles.  Advocates justify the low response rates by pointing to their relative low cost.  Others say that rich media will breath life into banner ads but I remain unconvinced.

Recent articles make me think I am not the only one.  Mike Shields of Mediaweek wrote about display ads a few weeks ago.  He quoted Greg March of Wieden + Kennedy as saying “Advertisers want to deliver impact, and I don’t think the impact for these ads is always that strong.”  Shields wrote that “click-through rates for banner [ads] rarely approach 1 percent”.  I have seen much smaller rates than that.

A recent BtoB special report on 2009 marketing plans, found that 30.6% of B2B marketers surveyed were planning on increasing their spending on banners.  This sounds promising except that other online tactics had higher growth percentages:  email 68.3%, search 50.0%, web-casting 42.9%, web site development 66.3%, and social media 46.6%. 

With new tools, analysts may be able to measure the impact of online ad campaigns, taking into account every ad served up to the user regardless of whether or not she clicks on it.  Hopefully we will soon be able to answer the question, what is the value of a banner ad?