If you ask this question in a room full of web designers you would probably hear them say “pay per click” is better. When asked why, they will usually respond, you only pay when somebody clicks on your ad.
I believe the correct answer is neither one is better, it all comes down to return on investment. If you spent $100 on banners and received $500 in return and spent $100 on pay per click and received $500 in return, does it really matter?
Here is an example of the dental industry. The current cost per click for dentists calgary is around $1.50-$2.00 per click. This means a typical $1000 budget will generate 500 clicks to a dental client’s website. Some latest numbers on pay per click advertising indicate that 30% are fraudulent clicks from competitors, random surfers, etc. Basically people with no intention of purchasing your product or service. This means we are really dealing with 350 relevant clicks above. A typical conversion rate of 2% will generate 7 new client sales. Pretty good for a $1000 investment.
Take the same $1000 budget and target a banner campaign on Calgary based web sites. $1000 at $20 CPM will result in a dental office receiving 50,000 impressions of a targeted banner ad. A typical banner campaign will result in 1-2% of clicks, or in this case 500 to 1000 click throughs. Using the same standard conversion rate of 2% will generate between 10 and 20 new client sales.
My experience in setting up and tracking both pay per click and banner advertising campaigns is that they are both effective in generate similar returns on investments. The key is having a good message.
With pay per click, the consumer is seeking out a business. With banners, the business is seeking the consumers.
Have you ever watched television, saw something and said I think I want that. Without that branding, you would have never had the knowledge to actually seek out the product yourself, yet there you go to purchase it. Banners act the same way, they can prompt you to make a purchase. Pay per click is great if you are in the market searching for the product or service, but want about the prospects that don’t know they need your product or service?