According to the updated Natural Born Clickers research completed by Comscore and StarCom “The percentage of Internet users who click on display ads has dropped from 32 percent to 16 percent in just two years, with only 8 percent of people on the Web now accounting for 85 percent of all clicks”

The research attempts to position the Click Through Rate as an unreliable measure of the true value of display ads.  The logic goes that a display impression can move attitudes towards a brand and ultimately sales without the Click.

I’m still a skeptic.  Display ads are a form of direct marketing and are best used to move a consumers into action.  Whether that action is a sale, a lead, captured consumer data, or enagement the display ad is best optimized to deliver a click.  With less and less consumers clicking on ads we’ve got to get more and more creative if we are to move that consumer into action.

Here is a recent example of a banner ad campaign interacting with the web page to make a more dramatic pitch. And hopefully increase click through rates. This is a iPhone ad the appears to interact with the entire Yahoo page.

Prices vary depending on the following:

• Type of display units. Standard banner ads will be less expensive than rich media ads.
• Quality of the content. The more targeted the audience of the web site the ads will be displayed on the higher the price.
• Placement of the ads on the site. If the ads are to be displayed on specific pages they will be more expensive then Run of Site (ROS) ad buys. ROS is where the ads will be displayed through out the entire site. Example: Ads on Yahoo’s home page cost hundreds of thousand of dollars per day. Whereas banners that run ROS throughout Yahoo can go for as low as a couple bucks per 1000 units (CPM)

For “junk” traffic (junk defined as not very targeted advertisements) you can pay between $0.25 to $1.00 CPM.

More targeted traffic will cost anywhere between $3 to $15 CPM (as of mid 2008 — prices are changing for the lower now due to the economy).

Current click through rates for display ads are about 0.3% at the time of this post.

The pricing here is for directional purposes only. The real test is to determine how valuable a media exposure is to you then back into the cost you’d pay for the impressions. For example, if a sale is worth $10 to you and you expect to close 1% of consumers exposed to your advertisements then:

100,000 Ads * 0.3% Click Through Rate (CTR) = 300 consumers to your web site * 1% conversion rate = 3 sales for each 100,000 banner impressions. Those 3 consumers made you $30. So your break-even CPM is $0.30.

Banner Ads

This image shows the tradition display advertisement units available. Also called “IAB” units. As the effectiveness of traditional display advertisements have wained new and innovative units have emerged. These include “fold overs” and expandable rich media units.

Other kinds of display advertising include:

Flash Banner Ads: adds moving elements
Examples
http://www.webpencil.com/portfoliorm1.htm

Rich Media Ads: Advertising banners that act like mini-applications in that a term can be searched, a topic selected from a drop down menu, etc., all within a single banner.
Examples
http://www.eyeblaster.com/products/rich_media_formats/

Interstitials: as in “ in between” these are ad units that take over the page or video between where the visitor was and where the want to get to

Pop Ups: The annoying ads that pop up on top of web content.

Fold Overs and other more innovative units. Where the web page can be pulled pack to reveal the ad.