The Problem With Banner Exchanges

You can call them link exchanges, banner exchanges, or even automated banner exchanges. They’ve been used for website promotion for at least a decade, maybe longer. And they often don’t work very well. Here’s why.

I admit, I’m coming to this game a little late; I hadn’t even heard of banner exchanges as such until recently, although I’m familiar with the somewhat related concept of reciprocal link exchanges. So I needed to do a little research into how they work. If this idea is new to you too, let me give you a little explanation.

Banner exchanges are typically a service offered by a central company that has built up a customer base focused on several general topics or categories (such as health, hobbies, shopping, sports, travel, etc.). Customers create a banner ad promoting their own website, and agree to show the banner ads of the central company’s other clients on their website. The central company requires its customers to put a code on the web pages on which the business will show the banner ads. In turn, of course, the customer’s banner ad gets shown on the websites of the central company’s other customers. There’s usually a ratio involved, often 2:1 – so if the original customer shows banner ads for the central company’s other customers to 500 visitors, their own banner ad gets shown 250 times.

Let’s break this down into a fictitious example. Say I run a store and website aimed at inspiring children to be creative – we’ll call it creativekids.com. I join the Southern States Banner Exchange. I create (or hire someone else to create) a banner ad that meets SSBE’s specifications for use in their exchange, and submit it. I look at SSBE’s list of categories, and choose the one into which my business fits most comfortably. This calls for a bit of thought, as I’ll be displaying ads from other businesses in the same category – and they’ll be displaying MY ad.

Once that’s taken care of, I decide on which page or pages of my website I’m willing to display banner ads from other businesses. I also get code from SSBE to add to those pages, so they can track the impressions those ads receive. Say we’re working with a 2:1 exchange ratio. For every 1,000 impressions my site provides to SSBE’s other customers, my banner ad will be displayed 500 times on other customer sites. Naturally, these banner ads can all be clicked, so visitors can leave the site they’re on and go somewhere else.

Does this make sense so far? Good, because I’m very bad with math – and apparently I’m not the only one. A number of small businesses that have used automated banner exchanges may not have run the figures completely. I found an article on website promotion myths that does exactly this, however. It discusses some of the problems with automated banner exchanges – and I hate to tell you how old it is. Yet if you do a search on the related keywords, you get plenty of hits in Google. Have they worked the bugs out? What’s going on?

As with any kind of advertising and promotion, it’s all about the response rate. The article I linked to on the previous page suggests that one should plan for a response rate around 1.5 to 2.5 percent. In other words, for every 100 impressions of a particular ad, you can expect 1-2 people to click on it – three if you’re really lucky. Here we’re using the expected return rate of a mass mailing. The picture for banner advertising effectiveness is a little more complicated, but those numbers for ROI are not unreasonable.

So, for the sake of argument, say my website is relatively young, perhaps a year old. And I regularly receive about 1,000 visitors a month, which breaks down into roughly 250 visitors a week. From what I’ve read in online SEO forums, that’s not unusual at all; it’s quite average, in fact.

As I mentioned on the first page of this article, for every 1,000 impressions I give to banner ads for other businesses, I get 500. So we’ll assume that I post the banner ads on my main page, and they get shown to my average number of visitors: 1,000 in a month. My banner ad is given 500 impressions that same month. Quickly: how many visits from click-throughs do I get on those ads?

We’ll be optimistic and give creativekids.com the higher percentage rate for click-throughs, or 2.5 percent. That means for every 100 impressions, I’ll get 2.5 visitors (on average). For 500 impressions, I’ll get a grand total of 12.5 click-throughs from my banner ad in one month. Round this up, and I’d get a grand total of 13 new visitors in a month. That sounds great…until you remember that I’m already averaging 1,000 visitors in a month. That means my gain for the month, measured as a percentage of my regular traffic, is considerably less than two percent. As the article I linked to earlier noted, “Statistically, this isn’t even a hiccup in a graph.”

But wait! I’m running these numbers with only one spot for banner ads. Say I run a 10-page website, and put a banner ad on every page. I’m fortunate enough to get engaged visitors, who on average view four pages when they stop by. This means I give SSBE’s customers 4,000 impressions every month. In return, my banner ad will be seen 2,000 times. Even at the low end for click-throughs, I’ll get 50 visitors, or five percent of the total traffic for my site.

That sounds nice, but even those numbers don’t address certain problems. If you’re trying to get your banner ads in front of more eyeballs, and hoping those 50 people will click on banner ads on your pages (to earn YOUR banner ad more views), let’s run the math again. Those extra 50 people, visiting four pages each, saw 200 banner ads, giving your banner ad an additional 100 impressions – which will deliver, at best, two to three more visitors.

But there’s a larger problem here. If creativekids.com has a product to sell, why am I putting banner ads on my website – thus encouraging people to click away? Worse, I don’t have much control over the banner ad, beyond the category; I can’t control its quality, and I probably won’t be able to directly specify on which sites my banner ad will appear – or prevent certain sites from showing their banner ad on my site, assuming they’re in the same category.

I’m open to the idea that automated banner exchanges might have changed over the years, but I haven’t seen a lot of evidence in favor of this. You can make better use of this precious space on your website. Consider ways to promote your website that won’t encourage people to leave it. As the article I linked to on the first page notes, you should ask yourself, “If I’m trying to get people INTO my website, why am I so committed to giving them exit points on it?” Good luck! 

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