Banner advertising can dramatically help you increase traffic to your web site. Banner advertising can be a very cost effective marketing solution and can help you to gain access to millions of internet users. It can also prove to be a huge waste of time, even creating a net loss rather than increasing your bottom line. So we'll try to guide you onto the path to true results and a very successful Internet Marketing campaign using banner ads.

First things first: What's it going to cost you? Assuming you're going to design and building your own banners, you can still loose money on the cost of advertising if you're not careful. Work out the estimated cost of each banner advertising campaign:

Cost-per-Visitor: If you pay $10 per thousand impressions ($10/CPM), and you get a 2.0% click-through (20 visitors), your cost-per-visitor is $.50 ($10 per 20 visitors).

Cost-per-Sale: Now you know about what you're going to pay per visitor. So what does that amount to per sale? Well, if 1 in every 20 visitors buys your product, your cost per sale is $10.00.

Total Sale Amount : $9.95 USD Paypal's Fee Amount : -$0.59 USD Net Profit Amount : $9.36 USD

So if each sale of your product produces a gross profit of $9.36, then your net profit per-sale will be -$.64 ($9.36 gross profit - $10 cost-per-sale). This campaign is not profitable!

As you can see, something has to change in order to make a profit. That's why it's important to track and calculate every campaign. So what went wrong with this example?

-Paying too much for the banner space?

-Need a better click-through rate?

-Need to charge more for your product?

The truth is that only you have the information required to decide but at least at this point you're in a better position to make a qualified decision.

Return on Investment Ratios: Your return-on-investment (ROI), before non-marketing expenses, is 0.0% ($0.00 total net profits with a $10 investment).

Experiment by advertising on multiple sites or using different banners if your budget will allow it. Find the perfect campaigns that yield the highest ROI.

A few terms to know: