Part 2: Producing revenue and banner insight

What are some strategies to cover site costs while you're trying to build profit?
Covering the costs really involves a couple of strategies. First of course is to limit them as much as humanly possible. In order to do that I use a special program to optimize every single graphic to the very limits. I'm also in the process of rewriting all of the card pages to allow for another new function we've just added to the card script, that will cut the bandwidth used while folks wander through choosing a card down to less than a quarter of what it is now.

I spend lots of time playing with banners in order to optimize the income from them, hence the banner rotator script. With 500 or so pages I could never change out banners without one.

How well have your banners worked out in terms of cross marketing? Which have you found to be most successful?
Ah, those banners. First, let's define successful in terms of a banner. That depends on whether you are the advertiser trying to attract attention or the website trying to make money by helping someone to attract attention.

For me of course, a banner is successful when it brings in $$$$$. If it doesn't pay, it is not a success. Period. From my point of view the most successful banners pay me a straight CPM (cost- per-thousand shown). The next most successful banners are a highly targeted banner designed to initiate click-thrus that pay either on a per click or per action model, with something highly desirable on the other end.

Least successful by far are banners that pay per sale. Per sale advertising does far better in print share of the income stream over the long haul. Ask me next year how long it took than it does from banner ads.

However, just because a banner is not successful from my point of view does not mean that it is not successful from the advertisers point of view. When you talk about banners and marketing, then you are really talking about two things rather than one: sales banners that are designed to elicit an immediate response from the viewer and branding banners that are designed to increase your brand awareness in the viewer.

These are definitely not the same thing and banners are one or the other, never both.

Editor's Note: For more information on banners, click-throughs and building revenue, please see the ibizBasics Online Business Edition.

What are some of the downsides to banner advertising?
My big problem with banners these days, one that I am talking about and writing about frequently, is that advertisers have changed almost universally to a pay-per-sale model, often with very low return days, while simultaneously providing the host website only with materials that are intended to increase brand awareness rather than initiate sales. To my mind, this is tantamount to theft of the host site resources.

This seems to be almost universal among users of certain affiliate program management agencies and nearly all of the large "presences" online and of course those dot coms that want to join the club.

We don't advertise for them. If you want to make sales and pay on commission, then you provide your affiliates with sales tools. If you want to brand, then pay just exactly as you would in any other medium, full price.

From the advertiser's point of view though, this is a fantastic strategy. You get the branding. You get clicks. Folks do come back sooner or later and maybe buy, particularly as you build name recognition, but you never have to pay commission because of the low return days and you get free advertising space. To make bad matters worse, often these same programs do very well in print.

However, there is a glitch: both of the two banner management services that handle 95 per cent of the "big boys" - Linkshare and Reporting.net, insist that you include a 1 x 1 invisible gif as a tracking mechanism, something that does not work in standard plain text email that most of us deliver.

If you don't include it they don't pay. If you do include it, then response rates are greatly decreased because the raw code hangs out on the page, giving a very non-professional appearance.

On top of that, should a viewer click on a banner on your site (or in some cases just see the banner), then days or weeks later click on a link in your newsletter and make a purchase, that purchase will get counted as "non-commissionable" with the claim that the return days have expired.

I've recently discovered that more than 80 per cent of all sales that we have ever made through every sponsor's program that we have ever participated in through a certain agency have been disallowed as non-commissionable because of this. And I am not a happy camper about that! Return days are supposed to apply to visits that don't come through your links.

Are there specific banners or banner enticements that work more efficiently?
What works for Absolutely Victorian and nearly all other sites that depend on banner advertising as part or all of the income stream in the current environment are free and trial offers with banners that are designed to initiate click-throughs and that's what we show. Even then, offers that are highly targeted to the particular audience perform far better than just category wide "free offers."

My site's audience is 85 per cent female, so a free trial of "Popular Mechanics" isn't going anywhere except maybe at Christmastime when everyone is frantic for a gift for the men in their lives.

Finally, what advice would you give a novice who wants to create a viable income producing website?
Lesson #1 - Have a firm business plan and stick to it!! Do not allow yourself to be attracted or distracted by the myriad of "build it and they will come" promises and sales pitches that you will hear online. Once upon a time, sites could support themselves solely from the proceeds of banner advertising but those gravy days are over, notice that even Yahoo now charges for a site listing.

Step 1: Start with a product or product line. It does not matter too much what product, it's how you sell it, not so much what you sell. Then determine who the target audience for that product is. It is far easier to pick a product, then target the audience than it is to find the "right" product for an audience you have already targeted.

Once you have identified a target audience for your product, invest some serious time into researching that group of people: What else are these folks interested in? What sites do they visit online? What ezines do they read? How much shopping do they do? What are the demographics? All of those things will influence your eventual site design and offerings. Keep good notes, you're going to want them later.

CAUTION: The Net is full of opportunities that allow unsuspecting wanna-be site owners to purchase "sales" sites that are nothing more than near-identical copies of some base site with an outside fulfillment house. You will lose your shirt. Whatever you do, do not "buy" some already built site.

A wise cautionary note to end on!