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Is online advertising viable for small businesses?

There has been a surge in programmatic online banner advertising over the last few years (increasing from 28% in 2013 to 45% in 2014) in terms of total UK digital marketing. For many, banner adverts are seen as a wasteful marketing cost but does this rise show that they are becoming viable for business once again?

At the dawn of the digital revolution the realms of online advertising were reserved for those with deep pockets and the willingness to risk a marketing budget on an unproven medium. The first online adverts were 468 x 60 banner ads which would be displayed at the top or bottom of a web page. Initially these new adverts had a high click through rate, as much as 50% in the early days. As more and more agencies saw the huge potential of these adverts the market began to inflate with investment at an astronomical rate.

‘What goes up must come down’, certainly that was the case for the late 90’s dot com bubble. The demand for online advertising space was high and prices for a single banner ad display could reach up to $100. It didn’t take long for new banner ads to get lost in all the marketing noise spamming the web. At this point in time the technology was still catching up to the marketing needs of agencies and the return on investment (ROI) was minimal, even a 0.2% click through rate would be seen as a huge success. The market became oversaturated towards the dawn of the millennium and by 2002 the dot com bubble had burst. In the first two years of the noughties the online advertising industry lost 20% of its revenue and billions of dollars worth of investment in dot com businesses was wiped out.

A Google rises from the ashes

In 2000 Google, which to this point was solely a search engine and did not sell anything, decided to launch Adwords.

Rather than simply selling advertising space to the highest bidder, Google would display text ads based on a number of factors alongside the value of the bid. Google took the already successful search engine model and applied it to advertising, now advertisers could target key audiences based on what they are searching for and only have to pay once the advert is clicked.

Whilst banner advertising looked like it was dying, Google stepped in and offered agencies a better online advertising product. Fast forward to 2004 and online ad revenue was back to its pre-burst level.

Have banner adverts caught up?

Now in 2015 we are seeing a revival of investment in banner adverts across a range of mediums. More than ever advertisers are able to collect data from a range of sources to target their customers. The price on user data is at a premium and almost everything we do online is tracked and logged for companies to optimise marketing or to sell on the data to third parties.

By using vast data banks agencies and companies can now specifically target users based on their digital footprint and ongoing maintenance can tweak targeting methods to maximise ROI. Successful marketers now have the ability to justify spending on banner ads as the technology available allows for much better click through rates.

Related Article: Is your business ignoring its online reputation?

Where is online advertising going?

With online companies finding an increasing number of ways to capture user data it is likely that the specified targeted adverts are set to increase. The one certainty for the future is the move towards a fully automated marketing system.

Digital advertising is way behind the world of investment banking in terms of automated programmes doing all the dirty work. Once this technology gap is bridged advertisers will be able to select a budget and watch as programmatic targeting, bidding, ad design and content are all conducted in a matter of milliseconds. Applications will be able to recognise target users, design a specifically worded ad with carefully selected images based on their browser history and then bid on the optimal position on the page to place the ad.


Has your business discovered the pitfalls of banner advertising? Or have your returns on investment paid off?

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